Is FHA Financing for Condos an option in 2010?

Real Estate Agent with Coldwell Banker Residential Brokerage


I've heard a lot of talk about condos being impossible to finance going forward as FHA will no longer be doing spot approvals after January 30th.  For the great majority of buyers without large down payments, FHA is your best friend.  Replacing spot approvals is an entirely new process called Direct Endorsement Lender Review and Approval Process (DELRA), another way for a lender to get individual approval on a condo without the entire association being on the list.  Sounds like business as usual, although it will save time and effort if the condo association is already approved.

Is your association or the association you are looking into on the approved list?  You can check here:

For a condo association to be on the FHA approved list, it must meet the following:

  • 50% of the units must be owner occupied or sold to owner who intend to occupy (for projects yet to be completed).
  • Projects must be covered by liability, hazard (and if necessary) flood insurance.
  • For projects under completion, 50% of the units must be sold or have a sales contract in place.
  • No more than 15% of units may be in arrears with association dues (more than 30 days past due).
  • A Reserve Study (every 12 months) must show that the association has "adequate funds" for capital improvements, typically 10% of the annual operating budget.
  • No more than 10% of the project can be owned by one investor.

Those projects to watch out for are very small associations (multi unit conversions). Many 2, 3 or 4 unit buildings were converted to condominiums earlier this decade. If one of those units is delinquent or the association doesn't have adequate reserves, the purchase may be doomed.

Work with an experienced team, a Buyer Agent and Mortgage Professional and save time and frustration by learning if the condo can be financed at all if you are using an FHA mortgage BEFORE writing an offer.  If you are a unit owner contemplating a sale this year, contact your association and get the ball rolling, to be able to market your unit as FHA approved will do wonders towards getting it sold.

For more information check out my website at

Comments (3)

Eric J
Eric J - Dream Home Financing - Freehold, NJ
Dream Home Financing

There could be many changes to the FHA guidelines which would not help real estate sales.

Jan 12, 2010 02:29 PM
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

Wow I sure hope they don't cut back on Condos as that will certainly hurt our market here. Of course with all the foreclosures we are fighting an uphill battle any way.

Jan 30, 2010 08:19 AM
Rick Beal
Coldwell Banker Residential Brokerage - Portland, ME

Eric and Joyce, thanks for your comments.  Nothing is easy is it?

Jan 30, 2010 03:00 PM