Put FHA Condos Back in Your Playbook!

Introducing FHA Condo Single-Unit Approvals

The best ability is availability. FHA-backed financing has greatly expanded the ability of first-time homebuyers to purchase a residence, but since the financial crisis of 2008 obtaining an FHA loan for a condominium purchase has been very difficult. In fact, there are approximately 150,000 condominium projects in the United States, but only 6.5% of them are approved to participate in FHA mortgage insurance programs. This stems largely from a post-recession rule that made individual condos ineligible to obtain FHA-backed financing if the condominium project as a whole was not eligible.

On October 15, the FHA implemented a Single-Unit Approval (SUA) process that enables borrowers to purchase a condo in a non-FHA approved condo project.  This update is expected to make anywhere from 20,000-60,000 more condos eligible for FHA-backed financing. Some eligibility requirements include:

Condominium Project

  • At least five units
  • 10 or more units, up to 10% may be FHA-Insured
  • Less than 10 units, up to two FHA-Insured units
  • At least 50% owner-occupancy
  • HOA Budget 10% reserve requirement (or amount supported by reserve study)
  • Maximum of 35% commercial space
  • Maximum 10% individual ownership
  • Has a Certificate of Occupancy that was issued at least one year ago or has been occupied
  • Manufactured homes, gut rehab or new construction is not eligible
  • No more than 15% of units are 60 days delinquent in HOA dues
  • Not located in an approved condominium project or unapproved phase of a condominium project with an approved Legal Phase

With generally less maintenance and lower prices than single family homes, condominiums are a great way for first-time homebuyers to transition from renting to owning. With the new SUA eligibility guidelines, you can now help more borrowers achieve the American dream of homeownership.

Contact an Account Executive or visit freedomwholesale.com for more information.

 

Sources:

https://www.forbes.com/sites/brendarichardson/2019/08/15/new-fha-guidelines-expand-access-to-condo-mortgages/#12946065323b

https://www.housingwire.com/articles/49851-fha-to-make-financing-easier-for-condo-owners/

 

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