FHA is making some big changes next month to their guidelines about approved condo HOAs. Around the middle of October 2019 they are going to start allowing “spot approvals” for condos that do not have FHA approved HOAs.
This is huge for the condo purchase market! For almost a decade, if condos were not in an approved HOA, they could not be purchased with an FHA loan. Getting a condo HOA approved is a long and arduous task. It costs money and it usually requires action from the HOA board of directors. The process had to be redone every two years and as a result, less than 10% of condo HOAs are currently approved.
The new “spot approvals” will open up the doors for many first time buyers who want to purchase, but can only afford a condo. Now, FHA buyers will have many more options for properties they can purchase.
The single unit spot approval requires the following:
For condo projects with 10 or more units, no more than 10% of the units can have FHA loans. For projects with fewer than 10 units, there can be no more than two FHA-insured units. NOTE- for FHA condo HOAs that are approved (as apposed to this spot approval), up to 50% of the condos can have FHA loans.
At least half of the units in the condo project must be owner-occupied.
The commercial/non-residential space within an approved condominium project not exceed 35% of the project’s total floor area (this is the same for Fannie Mae and Freddie Mac).
If you want to get pre-approved to purchase a condo or a home, please contact me- nichole@GrandLending.com