In order for a condo to be insured by the Federal Housing Administration it must first receive FHA Condo Approval. After receiving approval from the Federal Housing Administration, prospective buyers will then be eligible for mortgages from the FHA. Any condo that is FHA approved must first meet certain criteria that has been set by the Department of Housing and Urban Development.
The condo must firstly be in full compliance with all state laws regarding location and other regulations. Some condos are not eligible for FHA Condo Approval, these condos include those that are timeshares, houseboats, multi-dwelling condos and condo hotels.
In addition, the condo must consist of two or more units and also must be covered by liability insurance, flood insurance and fidelity insurance.
No more than twenty five percent of the condo's total floor area may be used for commercial purposes in order to be deemed eligible. Additionally, no more than ten percent of the condo may be owned by one investor. If a condo has ten or less units, only one may be owned by a single entity.
Moreover, no more than fifteen percent of the condo's units may be more than thirty days past due on their Condominium Association fees.
At least half of the condominium units must be sold before a mortgage is endorsed on any unit. In addition, at least half of them must be either occupied by the owners or sold to owners who will occupy the units.
While there are a great deal of requirements in order for a condo to become FHA approved. It is beneficial to both the owners and potential tenants since it makes housing possible for those who are low income. Best of all, FHA Condo Approval signifies that a condominium is safe and of the utmost quality.
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