Are you getting ready to purchase a condo? Many people do not know all condos are not approved by the Federal Housing Authority (FHA). FHA will not mortgage or insure some condominium projects.
Speak with your Realtor and/or loan officer and talk to them to find out which condos in Lexington and the Lake Murray area are on the FHA approval list.
The following types of condominium developments are ineligible for FHA financing:
A. Condominium Hotel or “Condotels”
B. Timeshares or segmented ownership projects
C. Houseboat projects
D. Multi-dwelling unit condominiums (more than one dwelling per condominium unit)
E. All projects not deemed to be used primarily as residential.
To be an APPROVED Condominium Project the following requirements are needed:
1. Projects must consist of two or more units.
2. Projects must be covered by hazard and liability insurance and if need be, flood and fidelity insurance.
3. The Right of First Refusal is ok UNLESS it violates the Fair Housing Act regulation.
4. No more than 25 % of the property’s total floor area can be of commercial use.
5. No more than 10% of the units may be owned by one investor. Condominium projects that have ten or less units can not have any single entity owning more than one unit with the project.
6. No more than 15% of the units can be more than 30 days past due on their HOA dues.
7. At least 50% of the total units must be sold.
In my next blog post I will go over how a condominium project MAY be approved if the developement is not currently on the FHA approval list.
