With all the various changes to FHA Guidelines over the last several years, condominium communities continue to struggle with FHA certification or recertification. Some communities are finding that although they were eligible for certification in prior years, when applying for recertification, they are now being rejected. So what’s changed?

To help you figure out whether your condominium community is likely eligible for FHA certification and recertification, below is a summary checklist of the latest and greatest requirements from the FHA.

Established Communities (2 or more units/fully built out/over 1 year old)

No more than 50% of the units may be FHA financed (if three or less units, no more than one unit may be encumbered by FHA);

  • Exception exists to increase cap to 100% but only under certain circumstances

No more than 25% of total floor area may be designated for commercial use;

  •  Exception exists raising cap to 35%, but only under certain circumstances;


  • At least 50% of community is owner occupied;
    Exception exists allowing associations to request approval with as little as 35% owner occupancy, but only under certain circumstances.
  • Short-term leases (i.e. leases less than 30 days) are not authorized by declaration;
  • Declaration does not have a leasing cap that is over 50% of the community;
  • Declaration does not require approval of tenants by association;

No more than 15% of the total units may be more than 60 days delinquent;

  • Exception exists increasing cap to 20% under certain circumstances;


  • Association’s property insurance policy must cover 100% current replacement cost;
  • Association must carry liability policy;
  • Association must carry fidelity policy (theft of funds) in the amount of 3x monthly assessments plus reserve funds if there are 20 or more units in the community;
  • Association must carry flood insurance if applicable;
  • Owners must have HO-6 policies if the association’s policy does not include interior unit coverage (including interior improvements and betterments);


  • At least 10% of association budget goes to funding reserve account;
  • Must ensure sufficient funds available for maintenance;
  • Must show adequate funding for insurance coverage and deductibles;

No more than 50% of units owned by one entity/person;

If special assessment is currently imposed, must provide written explanation discussing the following:

  • purpose of the assessment;
  • whether assessment affects marketability of units;
  • whether other special assessments have been imposed;
  • when assessment must be paid;
  • how the overall financial stability of the community may be impacted by special assessment;
  • Impact of assessment on future value of property;

If there is any pending litigation (outside routine collection and foreclosure actions), must provide explanation addressing the following:

  • reason of litigation;
  • anticipated settlement/judgment date;
  • if there is sufficient insurance coverage to pay settlement/judgment;
  • impact of action on future solvency of association;
  • whether there is an impact on owners’ rights;
  • whether there’s an impact on ability of owners to transfer units;

Remember, certifications only last two years, so all the above requirements must also be met and demonstrated when your community applies for recertification.

For more information about FHA certifications and recertifications, please contact a Altitude Community Law attorney at 303.432.9999.

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