Following are the basic guidelines for FHA condominium approval:
- Right of First Refusal cannot be present in CC&R’s – Can not violate Discriminatory Conduct under the Fair Housing Act Regulation
- Commercial Space – No more than 50% of property can be used as commercial space.
- All units and facilities & phases inside the project must be 100% complete
- Delinquent Dues: No more than 15% of units can be in arrears more than 60 days.
- At least 50% of total units must be sold prior to endorsement
- Any investor/entity (single or multiple owner entities) may own up to 50 percent of the total units IF at least 50 percent of the total units in the complex are owner occupied as principal residences.
- 50% of the project must be owner occupied.
- No more than 50% concentration of FHA Loans
- Sufficient Budget required – at least 10% of budget must go toward reserve funding
- There is no pending litigation (does not include routine collection activity or foreclosures)
- Insurance Coverage:
- Master or Blanket – Must be 100% of replacement cost of condominium, not including foundation or land.
- General Liability – insuring all common elements, and public ways
- Fidelity Bond – for 20 or more units. Covers D&O and Employees that handle funds. Must be 3 months aggregate assessments on all units + Reserves
- Flood insurance – Required if located within 100 year flood plane. LOMA or LOMR is required