August 5, 2015
In our last post we discussed basic eligibility rules for FHA condo loans–a condo project must be on or added to the FHA approved list in order to be approved for an FHA mortgage.
But there are additional rules in some cases. For example, site condo projects don’t require being added to the FHA approval list IF those condo projects meet certain requirements. These requirements may vary depending on the nature of the condo project, state law, and other factors.
The FHA condo project requirements are found in a PDF file you can download directly from the FHA/HUD official site. It contains the following provisions for site condos:
Condominium project approval is not required for Site Condominiums meeting all of the below defined requirements. Site Condominiums are defined as:
–Single family totally detached dwellings (no shared garages or any other attached buildings or e.g. archways, breezeways);
and
–Are encumbered by a declaration of condominium covenants or condominium form of ownership;
and
–The condominium unit consists of the entire structure as well as the site and air space and are not considered to be common areas or limited common areas;
and
–Insurance and maintenance costs are totally the responsibility of the unit owner;
and
–Any common assessments collected will be for amenities outside of the footprint of the individual site.”
FHA loan rules state that site condominiums that do not meet the above requirements will require “full project approval.” For manufactured or modular condo projects, the site condo rules do not apply. Instead, FHA loan rules require the following:
“Manufactured housing condominium projects (MHCPs) are eligible for FHA mortgage insurance. All outstanding and current FHA Manufactured Housing individual unit requirements remain applicable for both Home Equity Conversion Mortgages (HECM) and forward mortgages, including elevations in flood zones and foundation requirements. MHCPs must be submitted to the applicable Homeownership Center (HOC) for review and approval (HRAP). MHCPs…may not be processed as site condominiums.”
These are just a few examples of the regulations that govern condo projects and their eligibility for FHA home loans. We’ll cover more of these issues in future blog posts.
Do you have questions about FHA condo loans? Ask us in the comments section. All comments are held for review and may not appear on the site until they have been moderated.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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