The Federal Housing Administration FHA introduces the Single-Unit Approval process for Condominiums, this time, even if the condominium project is not FHA approved. The new FHA Loans for Condos become effective October 15, 2019
In the past, units in condominium projects were allowed to get an FHA Insurance, only if the whole condo project was also approved. This time, that condition is released.
Based on the FHA Press Release dated August 14, 2019, FHA’s new condo rule and the new Condominium Project Approval section of the Single-Family Housing Policy Handbook, provide a comprehensive revision to FHA condominium project approval policy.
FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities. 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.
U.S. Housing and Urban Development Secretary Ben Carson said: “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place. Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them”.
If you are looking for your new home, this is the time to ask your lender to see if you qualify for this program. There are additional requirements that lenders and other industry participants need in order to implement FHA’s new policy:
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.
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