FHA condo financing requirements

Just received the following info emailed to me from a mortgage loan officer from Bank of America. The information pertains to the guidelines that condominium complexes must meet before BofA will loan on them via FHA financing.
So if you’re in the market for a condo and plan to utilize FHA financing, you’ll need to be aware of the following:

When originating a transaction for someone purchasing an existing condominium with FHA financing it is important that you understand what requirements there are to be able to finance the condominium FHA:

  1. 90% Presale requirement
  2. No litigation
  3. 100% of the project is complete
  4. No more than 15% of unit owners are delinquent
  5. Budget shows minimum 10% reserves on the budget form
  6. Owner Occupancy over 50%

These items will be addressed within the HOA Certification that fulfillment sends and must be verified even if the condo is approved in FHA Connection.  As a best practice, make your buyers and realtors aware of the above requirements as well as asking up front if the project is 100% complete and whether it is in litigation.  These are questions that your realtor should be able to answer before you even originate the transaction.  

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About Guy Johnson

I am a licensed Nevada REALTOR® living and working in Reno, Nevada. Give me a call at 775-722-4011. My team and I will be happy to assist you with your real estate needs.
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4 Responses to FHA condo financing requirements

  1. Avatar doofus says:

    90% presale? Good luck with that!

  2. Avatar GrandWazoo says:

    I wonder where the Pallido stands on the 50% owner occupancy. requirement?

    Montage – JFC, is that thing going to be in limbo forever?

  3. Avatar Carleton says:

    Wazoo, probably not forever. There might be some resolution by 2014 or so.

    90% presold stands as an insurmountable barrier for the Montage ever qualifying for FHA financing. Unless, or course, the prices drop to around $75 a sq. ft.

    Ok, go ahead and laugh. Just like everybody laughed in 2005 at the absurd and ridiculous suggestion that houses in Somersett would be selling for 60% off in 2010.

  4. Avatar billddrummer says:

    Houses in Somersett were going to go up forever.

    The Belvedere, the Palladio, the Montage and all the other condo conversion projects in town (Tanamera?) won’t reach 90% presold or 50% O/O for a long long time.

    I spoke with a local hard money lender here who’s business has dropped by 90%. Instead of 10 deals a month, he’s doing 1.

    I don’t believe we are anywhere near healed in the real estate market.

    And don’t get me started on the soon-to-be-maturing commercial real estate loans that were written in 2004-2005 with projected rents and 5 year maturities.

    Good luck with renewing that deal since rents are down and vacancies are up.

    Perhaps I’m depressed because my personal life is in turmoil, but that’s the way it looks from here.

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