What Are The Qualification Requirements On FHA Condo Loans

This BLOG On The Qualification Requirements On FHA Condo Loans Was UPDATED On July 13, 2017

HUD, The U.S. Housing And Urban Development, is the parent of The Federal Housing Administration (FHA).

  • FHA is not a lender but a government agency whose role is to insure and guarantee FHA Loans that is originated by FHA Approved Lenders.
  • FHA Loans are for owner occupant properties only.
  • Second Homes and Investment Properties are not eligible for FHA Loans.
  • FHA insured mortgage loans are not just for single family homes.
  • Home Buyers of Town Homes, PUD, and Condominiums can qualify for FHA Loans.

Properties Eligible For FHA Loans

  • There are various types of FHA insured mortgage loans that is available for homeowners. 
  • FHA insured mortgage loans are available for owner occupant multi family units ( 2 to 4 units).
  • Home buyers of manufactured homes can qualify for FHA Loans.
  • Manufactured Homes need to meet HUD Guidelines and sit on permanent concrete foundations.
  • Town Homes and PUDs qualify for FHA Financing.
  • Home Buyers of Condominiums can qualify for FHA Financing, however, the condominium complex needs to be FHA Approved.

Condominium Complex

There are additional HUD Requirements for home buyers who want to purchase condominiums with a FHA Loan:

  • FHA regularly publishes of FHA Approved Condominium Complexes.
  • Many condominium complexes that were once FHA Approved are no longer FHA Approved.
  • It costs money for a condominium complex to get FHA Approved.

Is Condo Complex FHA Approved?

To be eligible for FHA Condo Loans, the condominium complex needs to be in full compliance with all laws of the state, county, and city where the condominium complex is located.

  • The condominium complex must meet all building code requirements and be in compliance with the local building statutes and ordinances.
  • A condominium complex needs to consist of two units and needs to be fully covered with property insurance which includes hazard and liability.

Mixed Use Condo Complex

  • If the condominium complex is mixed used, which consists of commercial space as well as residential units there are rules and regulations in qualifying.
  • FHA Guidelines state that the majority of the space is used as a residential building. 
  • Commercial space cannot consist of more that 25% of the gross total floor area in the complex. 
  • Another important factor is that FHA does not allow more than 10% of the ownership of the condominium complex be owned by one investor.

New Condominium Complex

  • FHA requires that more than 50% of the residential units be sold prior to granting the first batch of FHA condo loans in the particular condominium complex.
  • There are certain types of condominium projects that do not qualify for FHA condo loans. 
  • Non warrantable condos and Condotels do not qualify for FHA condo loans. 
  • Timeshares are not considered mortgages.
  • Timeshares are considered consumer installment loans.
  • Houseboats communities also do not qualify for FHA condo loans.

Related> Condominium Financing

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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