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Friday, April 26, 2019

FHA Condo Certification

In order to buy a condo unit with an FHA loan, it is required that the whole condominium is FHA certified by the Federal Housing Administration. Being able to accept an FHA backed loan will allow for more people to be able to purchase a condo from a building. With low down payment requirements, sometimes as low as 3.5%, FHA insured mortgages can be very desirable for first time home buyers. With many prospective condo buyers being first time homeowners, you may be interested in FHA condo certification for your building. There are some specific and extensive requirements that must be fulfilled prior to receiving this certification.

What Are the Requirements for FHA Condo Certification?

The Federal Housing Administration establishes the requirements for FHA condo certification. The requirements apply from everything to how space in the building can be used to HOA restrictions to insurance coverage. For example, to receive FHA condo certification, only 50% or less of the units can be investor owned or used as rental property. Additionally, only 50% or less of the units can be purchased using an FHA backed mortgage loan. Also, if there is commercial space in the condo building, it cannot occupy more than 50% of the property as a whole.

FHA condo certification also requires the condominium to maintain minimum insurance coverage. There must be master insurance covering 100% of the replacement cost of the condo. This does not include the foundation of the building or the land that it is located on. There must also be general liability coverage which insures all common elements and public access ways. Flood insurance is usually not required unless the condo is located within a 100 year flood plain.

There are also explicit restrictions and requirements for leasing for FHA certified condos. The restrictions must appear in something like the condo rules or bylaws. Some of the requirements include:

  • Prohibiting leasing units for less than 30 days (referred to as “transient leasing”)
  • Prohibiting restrictions that require a unit owner to occupy the space for a certain amount of time before they can lease (referred to as a “seasoning clause”)
  • Prohibiting an HOA from placing a total ban on leasing units

Additionally, while a unit owner has the right to impose a background check or credit check to screen a prospective tenant, the board of directors for the condominium do not have the authority to do so. The board of directors also does not have the authority to approve or deny leases. This power rests solely with the unit owner.

Representing Condominium Associations and Developers for FHA Certification and Recertification.


Obtaining FHA certification or recertification for your condominium can open a lot of doors and bring many more prospective buyers to the table. It is, however, a detail oriented process that requires complying with all of the FHA mandates for certification. At the Law Offices of Richard Palumbo, LLC, we can help you obtain FHA certification or recertification for your condo. Contact the Law Offices of Richard Palumbo, LLC today.

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The Law Offices of Richard Palumbo, LLC assists clients with Real Estate Law, Business Law, Probate, Evictions for Landlords and Property Damage matters in Rhode Island including Cranston, Warwick, Coventry, Johnston, Providence, Pawtucket, Central Falls and all areas throughout RI.



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