Buying a condo can be more difficult in 2014 due to new FHA Rules and Requirements. Condominiums must now be approved by the FHA for potential buyers who wish to purchase using FHA loans. To determine if a condo is FHA approved, your real estate agent or yourself can check the current list at the U.S. HUD web site. According to that list, as of today, there are only 23 approved condos in all of Broward county. It’s important to note that when viewing this list, the Expiration Date should be sufficient to complete closing. Condos must reapply after expiration, and if they no longer fit the requirements, no new FHA loans will be approved.
The minimum requirements for FHA condo approval are:
- Right of First Refusal cannot be present in CC&R’s – Can not violate Discriminatory Conduct under the Fair Housing Act Regulation 24 CFR part 100
- Commercial Space – No more than 50% of property can be used as commercial space. (NEW Sept 13th 2012)
- All units and facilities & phases inside the project must be 100% complete
- Delinquent Dues: No more than 15% of units can be arrear more than 60 days. (NEW Sept 13th 2012)
- 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. The previous limit was 10%.. (NEW Sept 13th 2012)
- 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