Due to the market meltdown it has become increasingly difficult for a qualified Buyer to purchase a condo in Florida. Fannie Mae and Freddie Mac have completely overhauled their criteria for approving a condo complex for financing. This is especially true in Florida. Before you set out to take your FHA qualified buyer out to look at condos you need to make sure that the properties being offered are FHA approved. As you will find out quickly. the majority are not approved because of the following criteria:
- Existing condominium complexes cannot have 15% or more of their total units currently in default on their assessments or 30 days or more late.
- The new guidelines require that condominium complexes have reserves for catastrophic insurance deductibles. Very few condos complexes have reserves in place.
- The condo complex is limited to no more than 49% of its units being second homes or investor owned (rentals).
- The complex can have no pending litigation.
- No weekly rentals, check in desks or daily maid services are allowed. These types of units are strictly viewed as condo hotels and are not eligible for financing
- Hazard insurance is required of all units in the condominium and the coverage must include contents (walls-in) insurance for each individual unit.
- Complexes are ineligible for financing where a single entity (the same individual, investor group, partnership, or corporation) owns more than 10 percent of the total units in the project.
You can search Hud's approved condominium database here https://entp.hud.gov/idapp/html/condlook.cfm
It really pays to do your homework while you are selecting properties, if not you will be looking at major frustration before all is said and done.