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FHA Single-Unit Approval

FHA announced in FHA INFO 19-41 revisions to the Condominium Project Approval Requirements. Effective with case numbers assigned on and after 10/15/19, FHA will insure mortgages on Condominium Units approved in accordance with the standards outlined below for Site Condominiums.

A Site Condominium refers to:

  • a Condominium Project that consists entirely of single family detached dwellings that have no shared garages, or any other attached buildings; or
  • a Condominium Project that:
    • consists of single family detached or horizontally attached (townhouse) dwellings where the unit consists of the dwelling and land;
    • does not contain manufactured housing units; and
    • is encumbered by a declaration of condominium or condominium form of ownership.

FHA will insure mortgages on Condominium Units approved in accordance with the standards outlined below for Single-Unit Approval. Single-Unit Approval refers to the approval of a unit in a Condominium Project that is not already a HUD Approved Condo Project at the time of case number assignment. To be eligible, the Condominium Project must have:

  • A CO that was issued at least 1 year prior or has been occupied;
  • Must have at least 5 units;
  • Must not be a Manufactured Home;
  • Does not have Ineligible Characteristics; or
  • Located in an unapproved phase of a Condominium Project with an approved Legal Phase.

Highlighted requirements are below. Refer to the “FHA Single-Unit Approval” section of the Fairway underwriting guidelines for detailed information and additional requirements.

  • Provide the following to This email address is being protected from spambots. You need JavaScript enabled to view it.:
    • Completion of HUD-9991 – Sections 2, 3 and 4 to be completed, signed and dated by HOA or management company; and
    • Provide insurance, financials and legal documents for review by FWL Project Review Team;
    • Property must meet the following (below are some of the main requirements of this review, this is not an all-encompassing list and additional requirements will apply):
      • FHA concentration can be no more than 10% of the project (2 units for project with 5-9 units)
      • Owner Occupancy of the project need to be at minimum of 50%
      • No more than 15% of the units can be 60 days or more delinquent in payment of their HOA dues
      • Individual Owner Concentration can be no more than 10% (1 unit for projects with 5-20 units)
      • Commercial Space in the building/project cannot exceed 35% and needs to be documented to be financially separate from the residential units (additional financial documents and legal documents will be required)
      • Insurance, financials, and legal documents review required
      • Note: AUS approval required or the max LTV of 90% if a manual UW 
      • Do not request the FHA case number, case numbers will be issued upon FHA approval.

Please contact your Regional Account Manager should you have any questions related to this Client Announcement.

 

10/24/19