Defined. The FHA (Federal Housing Administration) is a government-owned insurance company that insures loans for buyers who cannot afford a conventional down payment. With an FHA insured loan, buyers can obtain low down payments (3.5% of the purchase price vs. 20% for conventional loans), low closing costs, easier credit qualifying, and loans up to $625,500.
In 2010, FHA stopped giving loan by loan approvals ("spot" approvals) for several years and during that time required a condominium project to be approved as a whole, or "certified." FHA certification applies only to condominium projects, not . FHA no longer requires a condo project to be certified as whole and is again giving loan by loan approvals ("spot" approvals). However, a condo project may still receive certification as a project.
Certification Requirements. In November 2009, the FHA issued letters 2009-46A and 2009-46B outlining the certification requirements for condominium projects. The requirements were revised by Mortgagee Letter 2012-18, and further modified by Mortgagee Letter 2015-27 (as to owner occupancy and insurance requirements). The following are some of those requirements (always check the FHA website for complete and up-to-date information):
- At least
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TIP: An HOA attorney can help a condo board obtain certification for a project. Kimble Law has helped many condominiums obtain FHA certification.
(For reference: 57-8 is the Condo Act, 57-8a is the Community Association Act, 16-6a is the Nonprofit Act)