FHA Condo loan

Thinking of buying a Condo? Do you need an FHA Condo loan?

In accordance with the passage of the Housing and Economic Recovery Act of 2008 (HERA), the Federal Housing Administration (FHA) is implementing a new approval process for condominium projects and insurance requirements for mortgages on individual units, as authorized under Section 203(b) of the National Housing Act.

FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance with Section 203(b) of the NHA and 24 CFR 203 of FHA’s regulations. FHA will continue to maintain a list of approved condominium projects.

Lenders will be required to retain all the project legal documents, contracts, conveyances, plats, plans, insurance coverage, presale and owner occupancy conditions and other documentation in connection with their review and approval of the condominium project.

FHA Condo loan

The following documentation is required for Condo Project Approval:

Declaration of Condo Ownership

Covenants, Conditions and Restrictions (CC& R's)

Articles of Incorporation

Adopted Bylaws

Ground Leases (only if not fee simple)

Site Plan (only if new construction)

General Plan of Developement (only if new construction)

Location Map

Floor Plans

Proposed or Actual Budget for 2016

Reserve Study (only if we determine we need)

Management Agreement

Fema Flood Map

Condo Questionnaire

Walls In homeowners policy

Master Insurance Policy

2yr Budget/Financials (prefer audited, if not, need letter who prepared and association with HOA)

FHA Condo Loan

Guidelines regarding the condo development must be met.

The condominium project must be complete. There should be no further development plans for the project.
Control of the common areas of the project must have been turned over to the unit owners association for at least one year and ownership must be bound to the association.
The project must have adequate flood, hazard and liability insurance.
Individual units in the project must either be owned outright by the resident or have eligible leasehold interest. The project’s legal documents must provide for undivided ownership of common areas by unit owners and unit owners must have the right to use all facilities on an unrestricted basis.
The project’s documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title are generally unacceptable. Certain governmental or nonprofit programs designed to assist in the purchase or rental of low- or moderate-income housing are exempted from the restrictions on conveyance provisions. These programs are usually involved in assisting on down payments or on rehabilitation loans or grants.