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The Mortgage Muddle


 The following requirements must be met for condominium associations to be eligible for FHA-backed loans:   

The association’s annual budget must be adequately funded and at least 10% of the annual budget must be contributed to the reserve fund each year.No more than 15 percent of the units can be more than 30 days past due in their assessments. At least 50 percent of the units must be owner-occupied. At least 30 percent of all units must be sold before FHA-backed loans will be made available; the threshold increases to 50 percent in 2011. No more than 10 percent of all units may be owned by one investor. 

FHA-backed mortgages are increasingly popular for buyers with small down payments and low credit scores.  While FHA mortgages traditionally played a small role in the housing markets – about 5 percent of mortgages in 2007 – that number increased to roughly 20 percent in 2009.  Units in FHA-qualified associations attract a larger pool of potential buyers.