FHA Updates Condominium Rules

The Federal Housing Administration issued a final rule today providing greater flexibility for individual condominium owners to obtain an FHA-insured mortgage. Under the final rule—which takes effect 60 days after publication in the Federal Register—certain individual condo units may be available for FHA-insured mortgages even if the condominium project is not FHA-approved.

An individual may be eligible for a single-unit approval if the individual condominium is located in a completed project that is not approved and, for projects with 10 or more units, no more than 10% of the individual condo units can be FHA-insured. Projects with fewer than 10 units may have no more than two FHA-insured units.

The final rule also extends the recertification requirement for approved condominium projects from two to three years, and allows more mixed-use projects to be eligible for FHA insurance. Along with the final rule, the FHA issued updates to its Single Family Handbook.