View Loan Assumptions
Rates subject to change without notice
Most Florida Counties FHA Loan Limit for 2023 is $472,030 | Monroe County FHA Loan Limits are higher at $847,000
The Federal Housing Administration sets FHA loan limits on an annual basis.
Check to See your Florida FHA Loan Limit here
Condos can be a great way to build equity and have the benefits of homeownership without the responsibilities of maintaining a standalone property. FHA Condo loans provide a more accessible option for homebuyers who may not have the funds to make a large down payment, such as a 20% down payment that maybe required by conventional loans. With an FHA loan, the minimum down payment is only 3.5%, making it more affordable for many homebuyers. Not all condos are eligible for FHA financing, and some condo associations may choose not to participate in the FHA program. This can be due to a variety of reasons, including the belief that owners who need a lower down payment to qualify may be more likely to default on their loans.
With condos, it is important for homebuyers to understand the requirements for FHA-approved condos and to work with a real estate agent who has experience with FHA condos. They can assist in finding an eligible condo and help navigate the FHA loan process to ensure a smooth and successful home buying experience. A recent rule change in 2019 has made it easier for more condos to be eligible for FHA loans. Prior to this change, the entire condo community had to go through the approval process, but now individual condo units can be approved for FHA loans, making it easier for homebuyers to purchase a condo using an FHA loan.
It is important to note that not all condos are FHA-approved, and finding an FHA-approved condo can still be a challenge. Check the FHA’s Approved Condo List here. FHA maintains a list of approved condominium communities and individual units that are eligible for FHA financing. This list is updated regularly, so it’s a good idea to check it frequently. You can find the list on the FHA’s official website.
The FHA Condo Approval list is a list of condominiums that have been approved by the U.S. Department of Housing and Urban Development’s [ HUD ]. In order for a condominium to be approved, it must meet certain criteria established U.S. Department of Housing and Urban Development’s [ HUD ], such as being a certain percentage owner-occupied and being financially stable. This list is important because FHA loans can only be used to purchase or refinance condos that are on the Approved FHA Condo list.
Condominiums are defined differently than Single Family Homes
Condominiums are a single, individually-owned housing unit in a multi-unit building. The condominium owner holds sole title to the unit, but owns land and common property (elevators, halls, roof, stairs, etc.) jointly with other unit owners, and shares the upkeep expenses on the common-property with them. Unit owner pays property taxes only on his or her unit, and may mortgage, or sell it just like any other personal property.
The Federal Housing Administration [ FHA ] has specific requirements that condos must meet in order to be approved for FHA financing. These requirements are designed to ensure the safety and soundness of the property, as well as the financial stability of the condo association.
Some of the key requirements for FHA approval of condos include:
Owner occupancy: A minimum of 50% of the units in the condo complex must be owner-occupied.
Financial stability: The condo association must be financially stable, with enough reserves to cover any necessary repairs and maintenance.
Insurance coverage: The condo association must carry adequate insurance coverage, including hazard insurance, liability insurance, and any other insurance required by the lender.
No pending lawsuits: The condo association must not have any pending lawsuits or legal actions that could impact the financial stability of the complex.
No FHA concentration: No more than 50% of the units in the complex can have FHA financing.
Compliance with local and state laws: The condo complex must be in compliance with all local and state laws, including building codes and health and safety regulations.
It’s important to note that these requirements are subject to change and may be updated by the FHA from time to time. Homebuyers should always check with the FHA for the most current guidelines and requirements.
Condo mortgages come with slightly higher rates than single-family homes
Some condos are “Warrantable” and some are “Non-Warrantable”
*as defined by Fannie Mae and Freddie Mac (the two Government Sponsored Enterprises who purchase and sell mortgages on the secondary market)
*A high number of vacancies can also negatively affect the condo’s status
When buying a condo, ask your real estate agent to inquire about the building’s warrantability before you go any further.
On January 1, 2022, the updated Fannie Mae condominium lending guidelines went into effect. Fannie Mae Lender Letter (LL-2021-14) specifically states that new guidelines are necessary to combat aging infrastructure and significant deferred maintenance in condominiums in the wake of the tragic collapse of the Champlain South Tower in Surfside, Florida. The new condominium requirements, as outlined below, will apply to all loans in attached condominiums with 5 or more units. Specifically, condominium associations must be aware of the following changes:
Loans secured by units in a condominium with significant deferred maintenance or that have received a directive from a regulatory authority or inspection agency to make repairs due to unsafe conditions will no longer be eligible for purchase by Fannie Mae. Significant deferred maintenance is defined as any one of the following:
In order to determine whether significant deferred maintenance exists, Fannie Mae has indicated that its best practice for lenders is to review the past six months of a condominium association’s meeting minutes and obtain information about any maintenance or construction that may have significant safety, soundness, structural integrity, or habitability impacts on the unit or the project. References to items such as improvements, renovations, inadequate reserve funding, budget deficits, and negative cash-flows should be researched to determine if these items are related to deferred maintenance or other conditions that impact the safety, soundness, structural integrity, or habitability. Fannie Mae has also recommended that lenders review any available inspection, engineering, or other certification reports completed within the past five years to identify deferred maintenance that may need to be addressed.
Fannie Mae will now require all condo lenders to determine whether the condominium association has imposed any special assessments. The lender must document the loan file with the following:
If the special assessment is related to safety, soundness, structural integrity, or habitability, all related repairs must be fully completed, or the project is not eligible. Additionally, if the lender or appraiser is unable to determine that there is no adverse impact, the project is ineligible.
In Fannie Mae Lender Letter (LL-2021-14), Fannie Mae clarified that not every defect in a condominium will prevent a potential purchaser from obtaining a loan. Specifically, the following types of issues will not make a condominium project ineligible:
On December 15, 2021, Freddie Mac issued Bulletin 2021-38: Temporary Condominium and Cooperative Project Requirements and Topic 5600 Reorganization – CRC – Single Family – Freddie Mac. The requirements contained in Bulletin 2021-31 will become effective on February 28, 2022. Similar to the Fannie Mae Bulletin, Bulletin 2021-31 states that the purposes of tightening the lending requirements is due to increased risk after the Champlain Towers South collapse in Surfside, Florida. The Freddie Mac requirements apply to all condominium loans in in projects with five or more attached units.
Bulletin 2021-38 is similar to the Fannie Mae lending guidelines, but speaks in terms of not lending in condominiums that have “significant critical repairs”, which are defined as follows:
Repairs and replacements that significantly impact the safety, soundness, structural integrity or habitability of the project’s building(s) and/or that impact unit values, financial viability or marketability of the project. These repairs and replacements include:
Freddie Mac has indicated the following forms of documentation are acceptable in determining that a condominium does not have any significant critical repairs:
Similar to Fannie Mae, Freddie Mac will now require all condo lenders to determine whether the condominium association has imposed any special assessments. The lender must review the following with respect to each special assessment:
When your ready to get started on your VA loan, we are experts to guide you through the entire process, the first step is getting you pre-approved. You can apply online or you prefer to speak with one of our VA Mortgage Experts, we would be happy to speak with you. Call or text us at 407-955-4575.