Quick FHA Condo Approval Rules Guide you may need to know:

What is the FHA you might ask?

– FHA stands for Federal Housing Administration

– An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate income borrowers, FHA loans require a lower minimum down payments and credit scores than many conventional loans.

FHA’s new rule:

• Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing.
• Extends the recertification requirement for approved condominium projects from two to three years.
• Allows more mixed-use projects to be eligible for FHA insurance.

FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities.

Single-Unit Approvals

As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved.  An individual unit may be eligible for Single-Unit Approval under the following conditions:

• The individual condominium unit is located in a completed project that is not approved;
• For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

Minimum Owner-Occupancy Requirements

FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.

FHA Insurance Concentration in Condominium Projects

FHA will only insure up to 50 percent of the total number of units in an approved condominium project.

Commercial/Nonresidential Space Limits

FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.

To have your complex and condominium reviewed, feel free to reach out to Dan Cassel and the Trinity Mortgage Loan team at 866-310-1112 to learn more.