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:
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 freedomwholesale.com for more information.