Is Your Condo FHA Approved?

As we are beginning to enter the spring selling season. Sellers are beginning to get homes ready to put on the market and buyers are beginnign their searches a little more diilgently. As a majority of all mortgages today are FHA mortgages; is the place you are looking to sell or buy FHA approved? This sounds like a simple question. Most people would say if they are currently living there and there are no "issues" with the house that it would be. Well, on most homes that would be correct. However; what if you own a condo?

Not all condo associations are on the FHA approval list. In fact you have to apply to be eligible for FHA loans. In the past an individual owner of a unit could petition for a spot approval. Well last year that changed. Now, the FHA has made it that either the whole complex is eligble or none. So, how do you know if your complex is FHA approved? Fortunatley there is a website that will provide you with that information. You can visit: https://entp.hud.gov/idapp/html/condlook.cfm

So, what if your condo is not on the approved list and you want to get it on there. There are certain criteria that are needed to get on the FHA approval list. Here is a list of the certification criteria:

1. All units and common elements must be completely built.
2. No single entity can own more than 10 percent or more than one of the units, whichever is greater.

3. At least 50 percent of the units must be owner-occupied.

4. No more than 15 percent of the units can be more than 30 days delinquent on assessments.

5. No more than 25 percent of the total floor area can be used commercially.

6. At least 10 percent of the annual budget must go to reserves.

7. The right of first refusal is OK as long as it isn't used to discriminate.

In addition, associations must submit copies of their budget, insurance policy, declaration and bylaws, plat of survey, any management agreement, analysis of outstanding or pending litigation, and minutes from the last two meetings.

There are two ways you can get your condo FHA certified. One is to wait out for a buyer to come along and have the buyer's lender do the paperwork for you. There is a way for some of the largest lenders to do a direct endorsement for the FHA. You still need all the above criteria and documentation but the process is slightly shorter.

The other way is to petiton HUD. You have to get an applciation filled out and provide all the documentation to them and they will make a descision. If you meet the criteria above I have been told by a HUD representative that they will approve the assocaition and complex for a FHA loan. However;it has to be renewed every year as well now. Just because this year you may qualify next year you may not if you do not meet the same requirements.

So, looking to sell your condo or purchase one....and you need an FHA loan. make sure it is on the list or is eleigible to be approved.

Dave diCecco
Realtor/Broker
www.davedicecco.com