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Put FHA Condos Back in Your Playbook!

Put FHA Condos Back in Your Playbook!

Posted on May 22, 2020, 2:42:08 AM GMT

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

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.

  • 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

Contact an Account Executive or visit for more information.