FHA Loosens Condo Rules What are some of the new rules? Condo fee delinquency rule changes from 30 days overdue to 60 days The FHA has ﬁnally softened its stance on delinquent monthly condo fees and is now allowing a maximum ﬁfteen percent of a project’s units to be 60-days delinquent on fees.
Expanded investor purchasing, from 10% to 50% of the project’s units The developer can now buy up to half of the project units but only if the developer states that at least half of the units are owner-occupied.
Allowed commercial space increased from 25% to 50% Projects are now allowed to have up to half of the project be commercial, but the ultimate approval authority still rests with the FHA.
Fidelity insurance now required If a management company provides services in the condo, the company must obtain its own ﬁdelity policy as opposed to companies obtaining separate insurance for each condominium.
What didn’t change? FHA financing percentage and owner occupancy limits Before a buyer can obtain FHA condo ﬁnancing, half of the project’s units must be bought by third party buyers. In addition, only half of a project’s units can have FHA ﬁnancing.
Spot approvals still not allowed Spot approvals allowed individual unit ﬁnancing while being able to skip the standard FHA approval process. Lenders abused spot approvals, so the FHA took them away.
For more information about FHA condo requirements, please visit: www.lender411.com/fha-approved-condos