Many Condominium Projects in NC that were approved prior to 2011 have not had their approvals renewed. There are specific guidelines issued and documentation that needs to be updated for FHA Condominium Approvals in NC, the project must basically get re-approved. Until that process is complete, projects that “lost” their approval are not eligible for FHA Mortgage Loans in NC.
With the renewed interest by First Time Homebuyers to live in more “walkable” urban areas – condos in NC are very appealing. Because most condos in NC are located in more densely populated areas, they are generally not eligible for USDA Home loans, which require no money down. The NC First Time Homebuyer Program (which we offer) does allow for a 3% downpayment grant, and the 3.5% down payment required by FHA can be a gift from a family member.
While the list below is not the COMPLETE set of FHA guidelines, it’s important to review them. You will notice that these guidelines for FHA Condominium Approvals in NC, make purchasing a property near one of our campuses (with a kiddie condo loan) almost impossible because of the concentration of non-owner occupied properties. Here’s a map showing where the approved projects are located in NC as of 5/1/2013. Here’s a list of NC FHA Approved Condo Projects.
The NC Guidelines for FHA Condo Approval 2013
Although there are many FHA Condo Approval Guidelines, these are the basics that will determine eligibility. These guidelines are taken directly from the FHA Mortgagee Letter (ML 2011-22) and the Sept 13, 2012 update.
- Right of First Refusal cannot be present in CC&R’s – Can not violate Discriminatory Conduct under the Fair Housing Act Regulation 24 CFR part 100
- Commercial Space – No more than 50% of property can be used as commercial space. (NEW Sept 13th 2012)
- All units and facilities & phases inside the project must be 100% complete
- Delinquent Dues: No more than 15% of units can be arrear more than 60 days. (NEW Sept 13th 2012)
- At least 50% of total units must be sold prior to endorsement
- Any investor/entity (single or multiple owner entities) may own up to 50 percent of the total units IF at least 50 percent of the total units in the complex are owner occupied as principal residences. The previous limit was 10%.. (NEW Sept 13th 2012)
- 50% of the project must be owner occupied.
- No more than 50% concentration of FHA Loans
- Sufficient Budget required – at least 10% of budget must go toward reserve funding
- There is no pending litigation (does not include routine collection activity or foreclosures)
- 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. LOMA or LOMR is required