FHA Condo Loans

FHA Condo Loan Mortgage Guidelines and Requirements

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article covers FHA Condo Loans Mortgage Guidelines And Requirements

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

  • FHA is not a lender
  • FHA is a government agency whose role is to insure and guarantee FHA Loans that is originated by HUD 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
  • FHA Home Loans are for owner occupant properties only

Properties Eligible For FHA Loans

What properties are eligible for FHA loans

There are various types of FHA insured mortgage loans that are available for homeowners.

  • FHA insured mortgage loans are available for owner occupant multi-family units ( 2 to 4 units)
  • Homebuyers of manufactured homes can qualify for FHA Loans
  • Manufactured Homes need to Meet HUD Guidelines
  • To qualify, manufactured homes needs to be fixed 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

HUD announced last year they will allow exceptions for condo buyers who purchase a condominium in a non-HUD-Approved Condo Complex. FHA Spot Loans are now allowed on a case by case basis.

Condominium Complex

There are additional HUD Requirements for homebuyers who want to purchase condominiums with an 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

However, effective immediately, FHA Spot Loans is allowed.

Is Condo Complex 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
  • It also 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.

  • HUD Guidelines state that the majority of the space is used as a residential building
  • Commercial space cannot consist of more than 25% of the gross total floor area in the complex
  • Another important factor is HUD does not allow more than 10% of the ownership of the condominium complex to be owned by one investor

New Condominium Complex

What is a new housing complex

HUD 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

Gustan Cho Associates is a HUD Approved Lender with no overlays on government and conventional loans. Borrowers who need to qualify for government and/or conforming loans with no overlays, please contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.

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