New Orleans Louisiana Real Estate and Community Blog 

FHA has announced a new set of guidelines for financing condominiums that will be put into place November 2, 2009 and will make it much more difficult to finance condominiums through the FHA. If you are considering purchasing or selling a condo in the near future you may want to consider these eligibility requirements…

• The condominium project must consist of two or more units.
  
  
• The condo project must be covered by hazard and liability insurance, and flood insurance if applicable.
  
  
• The property must have a minimum of 75% of its square footage used for residential purposes and no more than 25% for commercial purposes. The commercial units must not adversely affect the residents.
  
  
• A single investor may not own more than 10% of the units. This applies to the developers/builders that rent vacant and unsold units. If there are only two or three units in the project, no single entity may own more than one unit, all units and common areas must be 100% completed and only one unit can have non-owner occupants.
  
  
• No more than 15% of the units can be more than 30 days past due on their condo association dues.
  
  
• A minimum of 50% of the units must be sold prior to the endorsement of any mortgage on a unit. A valid presale must include an executed sales agreement and evidence that the lender is willing to make the loan.
  
  
• A minimum of 50% of the units must be owner-occupied or sold to owners who intend to occupy the units.
  
  
• In condo projects of three or fewer units there will be no more than one FHA insured unit. In projects of four or more units, there will be no more than 30% of the total units insured by the FHA.
  
  
• A study of the current reserves must be performed to insure that adequate funds are available for funding capital expenditures and maintenance. The current study must be no more than twelve months old.
  
  

It’s not as complicated as it sounds, and many existing condominium projects will be eligible but if you need help negotiating your way in the purchase of a condo call Kelli Wright at 504-613-7902.

Posted by:Kelli Wright