Eligibility Requirements for FHA Spot Approval
Effective for new case numbers assigned on or after October 15, 2019, a Single Unit Approval may be eligible for a unit in a condominium project that is not currently a HUD approved project. Single-Unit Approval refers to approval of a Unit in a Condominium Project that is not an Approved Condominium Project.
Maximum Loan To Value: To be eligible for Single-Unit Approval, the Mortgagee must verify that the mortgage application receives an Accept from TOTAL Mortgage Scorecard through DU or LPA, else transaction has a maximum Loan-to-Value (LTV) of 90 percent.
Project Size and Financing Type:
Project must be established, and must have five (5) or more units
For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.
FHA will only insure up to 50 percent of the total number of units in an approved condominium project.
Delinquent Assessments
No more than 15% of the total number of units are 60 or more days delinquent on HOA Assessment dues
Excessive Commercial Space and Other Ineligible Property Types
FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project's total floor area.
Financing is not allowed in Coastal Barrier Resources System
Cooperatives, Condotels, projects with mandatory rental pooling agreements, timeshares or segmented ownership, multi-dwelling are ineligible.
Units or Projects with mandatory rental pooling agreements that require unit owners to either rent their units or give a management firm control over the occupancy of the units.
Leaseholds are ineligible, an exception may be considered if an attorney opinion is provided stating the lease complies with FHA Lease guidelines
Pending Litigation
Projects in which active Litigation regarding safety, structural soundness, habitability or functional exists are not eligible.
Project Occupancy (Investment Properties)
Project must have at least 50% primary occupancy and a unit owned by the builder/developer is not an owner-occupied Unit.
Reserves
Project budget will require a minimum or 10% reserve allocation.
Project balance sheet is required.
HOA must have separate operating and reserve accounts
Single Entity Ownership
Maximum single entity ownership is 10% for projects consisting of 20 or more units, a single entity cannot own more than 1 unit for projects with less than 20 units. An individual/single entity (e.g. investment group, partnership or corporation) applies when one single entity owns more than a certain number of units in the condo project.
Project Insurance Requirements
Fidelity Insurance will be required for projects consisting of more than 20 units in an amount no less than 3 months HOA dues plus the balance of the reserve account. The property manager must be either covered as an additional insured on the HOA's policy or provide evidence of their own coverage.
Co-insurance is only allowed with an Agreed Amount or Agreed Value endorsement
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