Is that Condo FHA Approved?

Condos offer a carefree lifestyle that many of you find especially appealing. However, if you have been pre-qualified for an FHA loan, you need to be sure that the community you’re interested in is approved under your loan requirements.

At one time, condominium developments that were FHA approved were approved for “life”. Thanks to the 2007 housing meltdown, that is no longer the case. In order to establish better oversight of all condo loans it insures, FHA forced all communities (who were approved before 2008) to get re-certified. And this new certification now comes with an expiration date. Just like it is with professional associations, condos will have to get re-certified every couple of years. Here are some of the requirements needed for FHA approval:

1. No more than half of all units can be tenant-occupied.

2. The number of owners who are delinquent in their condo fees cannot exceed a certain threshold.

3. There cannot be any pending litigation regarding safety or habitability.

4. No more than 30% of the units can be backed by the FHA financing.

5. Reserve funding for maintenance and repairs should equal about 10% of the operating budget.

As a result of these new changes we can no longer assume that a community is FHA approved just because it was in the past. Some may no longer qualify. Others may still be going through the re-certification process. So if you are in the market for a condo, don’t set yourself up to be disappointed! Before you put a condo on your must-see list, make sure that you are able to purchase it with your FHA loan. Click here to visit HUD’s website for a detailed list of FHA approved condominiums. If you have any questions or need help, just let me know!