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.
- 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.