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Temporary FHA Guidance Eases Condo Project Approval Requirements

2015-32The FHA has issued a press release announcing temporary guidance that will make it easier to get a condo project added to the approved list for an FHA mortgage loan.

According to HUDNo.15-145, the FHA/HUD, “published new guidelines under its condominium approval process intended to increase affordable housing options for first-time and low- to moderate-income homebuyers. Effective immediately, FHAs temporary guidance will streamline the agencys condominium recertification process and expand the eligibility of acceptable owner-occupied units to include second homes that are not investor-owned.”

These new guidelines, the FHA press release says, will be in effect for one year, and will “serve to revise FHAs condominium approval process until the agency can implement a more comprehensive condominium rule change.”

The new guidance, issued on the FHA/HUD official site on November 13, 2015, modifies the requirements for condominium project recertification. It also revises the calculation of FHAs required owner-occupancy percentage, and “…expands eligible condominium project insurance coverages”.

There is also something under the new rules the FHA calls Streamline Condominium Recertification:

“FHA-approved condominium projects require recertification after two years to ensure that the project is still in compliance with FHAs eligibility requirements and that no conditions currently exist which would present an unacceptable risk to FHA. For existing condominium projects seeking recertification, FHA will now only require applicants to submit documents reflecting any substantive changes since the projects prior approval.”

There is also a new set of temporary guidelines for lenders who need to calculate the owner-occupancy ratio.

“The procedure for calculating the required owner-occupancy percentage (50 percent) is modified to allow units that are not investor-owned to be considered owner-occupied for the purpose of Condominium Project approval. A condominium is considered to be owner-occupied provided they are not:

Tenant Occupied;
Vacant and listed for rent;
Existing (previously occupied), vacant and listed for sale; or
Under contract to a purchaser who does not intend to occupy the unit as a Principal Residence or Secondary Residence. The term Principal Residence and Secondary Residence have the same meaning.”

These new guidelines are effective “immediately” as of Friday the 13th, 2015.

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Bruce Reichstein - FHA News Author

By Bruce Reichstein

November 16, 2015

Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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