FHA Condo Loans
FHA insured mortgage loans are not just for single family homes. There are various types of FHA insured mortgage loans that is available for homeowners. FHA insured mortgage loans are available for multi family units ( up to 4 units), manufactured homes, and condos. There are certain guidelines for FHA Condo Loans.
Condo needs to be FHA approved with FHA Condo Loans
In order for a mortgage loan borrower to be able to use FHA condo loans, the condominium complex and condo must be on the FHA approved list of condo projects. FHA regularly publishes a list of all condo projects that is FHA approved on its FHA website.
Criteria to be FHA Approved to utilize FHA Condo Loans
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 buidling 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 condominium projects
If the condominium complex is mixed used, which consists of commercial space as well as residential units, FHA condo loans requirements state that the majority of the space is used residentially. 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 investor owned.
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, and houseboats communities also do not qualify for FHA condo loans.