The FHA Program for Condominiums is a tiny bit different from the program that covers “traditional” Single Family Homes. Originally, the program was designed with differnt mortgage insurance coverage, that is no longer the case. The program, HUD Section 234(c) of the National Housing Act provides mortgage insurance for any mortgage loan covering a one-family unit in a project coupled with an undivided interest in the common areas and facilities which serve the project. All projects are included in the 234 (c), including dwelling units in detached, semidetached, row, garden-type, low- or high-rise structures. These types of properties are referred to as Condominiums.
HUD / FHA do not make loans, they insure them thruogh the mortgage insurance program. HUD will insure mortgagees against losses on mortgages used for buying a condo or to refinance individual units in eligible condominium projects provided that they meet certain guidelines.
Project Eligibility. The condominium project must be on HUD’s approved condominium list. Many projects that were are approved prior to 2011, did not renew their documents, and are no longer on the NC FHA Approved Condo list. Here are some of the requirements for NC FHA Condo Project Approval.
Applicant Eligibility. Eighty percent of the HUD-insured mortgages in a condominium project must be the principal residence of the owners (owner-occupants). This can be determined by calling the property management group.
Maximum Insurable Mortgage: Same as the “regular single family” Section 203(b)
Minimum Down Payment: Same as Section 203(b), which is 3.5 percent.
Mortgage Term: Same as Section 203(b), which is 15, 20, 25 or 30 year terms.
FHA PMI: These are the same rates as a “traditional” FHA Loan. In years past, FHA had a separate FHA PMI rate for Condos.
Refinancing: Same as Section 203(b).
If the Condominium is not approved then the Lender may go through the “Spot Approval” process. For more information on this approval process, please click here.