The Meisner Law Group, P.C. legal team is acutely familiar with the FHA eligibility requirements and is ready to assist your Association in its endeavors to help you attempt to achieve the desired FHA approval and/or re-certification for your Condominium Project. We can present your Association with a proposal concerning the legal work needed and a quotation for the legal services to be provided. Please contact our office at 248.644.4433 if you wish to discuss this important undertaking further.

Summary Guidelines for FHA Condo Approval 2018*

Although there are many FHA Condo Approval Guidelines, these are the basics that will determine eligibility.

*Please note that the FHA may soon implement additional changes pursuant to the Housing Opportunity Through Modernization Act, so please contact us to confirm current requirements.

  • No more than 50% of the property can be used as commercial space.
  • No more than 15% of units can be behind in their assessments more than 60 days
  • Any single owner may own up to 50% of the total units if at least 50% of the total units in the complex are owner occupied as principal residences.
  • At least 50% of the units must be owner occupied.
    *There is an exception to this rule, which reduces the required owner occupancy to 35%. A special set of additional guidelines will apply. The exception is only given to existing condo complexes with at least 3 years of very stable finances, and low delinquency rates.
  • No more than 50% concentration of FHA Loans
  • Sufficient Budget required – at least 10% of budget must go toward reserve funding, and have a current “adequate” reserve fund
  • 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.
  • Leasing Restrictions in the Bylaws must comply with the following:
    • No transient leasing of units (defined as less than 30 days)
    • No “Seasoning Clauses” (A restriction that requires a unit owner to occupy the unit for a specified time-period before they can lease) Some circumstances with hardship clauses may be OK, but it’s case-by-case.
    • The Board of Directors cannot have the power to:
      • Approve leases or deny leasing. The unit owner must have the right to lease to any tenant.
      • Impose background checks, credit checks, or any other type of screening for prospective tenants

These excerpts from the FHA Condo Approval Guidelines are for informational purposes and are subject to frequent amendment by the FHA. If you have a specific question about your condominium community and its eligibility for FHA approval, please contact us at 248.644.4433..