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Eligible & Ineligible Projects

 

Eligible Projects

 

Eligible condominium projects are those that have been declared in the county records and exist in full compliance with the applicable state law requirements of the jurisdiction in which the condominium project is located, including good standing with the State, and with all other applicable laws and regulations.

 

The FHA insures condominium single unit loans for up to 30 year terms to purchase or refinance a unit in an FHA-approved condominium project. The condominium project must be primarily residential, contain at least two (2) dwelling units and can be detached, semi-detached, a row house, a walk-up, mid-rise, high-rise, including those with or without an elevator, or manufactured housing. Leasehold condominiums that have an HOA lease for not less than 99 years and which is renewable are eligible for FHA approval. There are additional approval criteria.

 

Site Condominiums do NOT require project approval when they meet the conditions that HUD consider to be more analogous to a single family home than a condo.  Site condos are defined as: 1) single family totally detached dwellings (no shared garages or any other attached buildings or e.g. archways, breezeways);  2) units encumbered by a declaration of condominium covenants or condominium form of ownership and the condominium unit consists of the entire structure as well as the site and air space; 3) are not considered to be common areas or limited common areas; 4) the insurance and maintenance costs are totally the responsibility of the unit owner; and 5) common assessments are only for amenities outside of the footprint of the individual site. 

 

Manufactured Housing Condominium Projects (MHCPs) may not be treated as Site Condominiums - these projects require approval under the HRAP option.  However, modular homes are processed as single family homes for insurance purposes and are eligible to be treated as Site Condominiums as long as they meet the stated definition.

 

Ineligible Projects

 

The FHA will not insure mortgages that are secured by units in certain types of condominium projects, regardless of the characteristics of the unit mortgage.  Loans secured by units within the following types of projects are not eligible for FHA insurance. The list below is not an exclusive list of ineligible project types as there may be other projects with similar features that would be ineligible for FHA insurance. FHA reserves the right to determine the eligibility of any condominium project.

 

Rentals        Projects with mandatory rental pooling agreements that require owners to either rent their units or give a management firm control over the occupancy of the units, and projects that restrict the owner’s ability to occupy the unit.
Mixed Use    

Projects where more than 25 percent of the total space is used for nonresidential units.  Waivers for projects with up to 35% non-residential are possible.  Live/work projects MUST have no more than 35% of non-residential space in the project AND in any one unit.  Units with living upstairs and work downstairs that are 50/50 square footage splits are not eligible.

Condotels     Condominium hotels which are managed and operated for lodging, even if the units are individually owned.  This includes projects that include registration services and offer rentals of units on a daily, weekly or monthly basis.  This also includes conversions of existing hotels and motels.
Coastal Barriers   HUD can not insure a project within designated coastal barriers of the Atlantic Ocean, Gulf of Mexico or the Great Lakes as defined by Department of Interior’s coastal barrier resources map.
Timeshares          Any projects with any form of segmented ownership.
Houseboat      Any type of boat or houseboat.
Multi Dwelling     Any project that has more than one dwelling per condominium unit.
Assisted Living      Facilities providing assisted living are generally not eligible including required purchases by unit owners, commercial interest, ownership of retention of commercial entities that provide additional services
Developer Retention of Common Area. 

Projects where the developer retains ownership to any common areas or amenities once transfer of control has been turned over to the Homeowners Association.

 

Unique projects
Bankruptcy/etc    The FHA will give special consideration, and will approve under certain circumstances, projects that are in bankruptcy, placed into receivership, have been transferred under a bulk asset sale, have completed foreclosure, or have accepted a deed-in-lieu of foreclosure.  These projects must be submitted under the HRAP option.
Auctions     The FHA may approve projects where the sponsor is offering unsold units for sale if it can be shown the stability of the project will not be compromised.
Affordable Housing      Projects with local government required affordable housing are eligible for approval if they meet certain conditions.