Updated FHA Rules for Condominiums

The Federal Housing Administration (FHA) has updated its lending guidelines regarding condominiums.  Here are the most significant changes:

1)   Previously, FHA approval was available to condominium associations if no more than 15% of units had fallen behind on their assessment payments.  Moreover, since many lenders are notorious for not paying assessments on bank-owned properties, the FHA exempted bank-owned units from this 15% guideline.  Now, however, the FHA will look at all units in the association, even if they are bank-owned, to make sure that no more than 15% of units are past due.

2)  If a condominium association is new construction (not a gut rehab or remodel), only 30% of the units must be owner-occupied.  Previously, the requirement was 50%. 

3)  At least 30% of the units must be sold before the FHA wil provide any FHA loans at the association.

If you are buying a condominium and trying to get FHA financing, or if you are part of an association trying to get FHA approval, be on the lookout for these new requirements!