condominium projects have already met the FHA requirements for
financing individual condo units, however, some condominium
associations may not try to become approved.
spot loans are designed for borrowers wanting to buy or
refinance a condo in a non-FHA approved project. The following
guidelines determine if a condo qualifies for an FHA spot
condominium association cannot have a first right of refusal
restriction on sales.
The Condos must provide undivided ownership of common areas by
the unit owners.
The condominium project cannot be subject to additional
phasing or annexation.
No legal action or special assessments can be pending against
the condo association.
Common areas must be under the control of the condo
association for at least one year.
At least 90 percent of the units in the condominium project
must be already sold.
At least 51 percent of the condominium units in the project
must be owner-occupied.
There can be no adverse environmental factors affecting the
project or individual condos.
No single entity can own more than 10 percent of the total
units in the condo project.
The condo units must be owned in fee simple or under a lease
hold acceptable to FHA.
For projects over 30 condos, no more than 10 percent of the
condos can have FHA loans, and for projects of 30 condos or
less, no more than 20 percent of the condos can have FHA
approved lenders can make sure the requirements are
satisfied to process FHA spot loans.