New FHA Condo particulars taken directly from the mortgagee letter; the new rules go into effect on October 1st 2009 August 24, 2009

• Projects consist of two units or more.
• Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
• Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.
• No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
• No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.
• No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
• At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
• At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
• For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
• Legal Phasing is permitted for condominium processing. It is recommended that developers submit all known phases for initial project approval. For purposes of calculating the owner-occupancy percentage:
  • On multi-phased projects the owner-occupancy percentage is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the condominium project remains the same;
  • If multi-phasing includes separate ownership per phase, each phase is calculated individually; or
  • Single-phase condominium project approval requests must meet the owner-occupancy percentage requirement.

FHA Concentration

• Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
• Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.

Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.


Today's Rates:

30 YR Fixed - 5.125%
30 YR FHA - 5.37%
15 YR Fixed - 4.750%
5/1 ARM - 4.125%
7/1 ARM - 4.750%

30 YR Fixed JUMBO - 6.125%
5/1 ARM Jumbo - 5.250%
7/1 ARM Jumbo - 5.500%