FHA Minimizes Owner-Occupancy Requirements For Condos

Several months ago, President Barack Obama signed the ‘Housing Opportunity Through Modernization Act of 2016’ into a law. Due to this, a lot of people were happy because it modified the Federal Housing Administration’s rules regarding condominium financing, with other changes.

The National Association of Realtors indicated that the law will improve the restrictions regarding FHA financing in condominiums.

FHA’s new rules regarding condo financing

Last month, the FHA declared that it modified a few of its rules regarding condo financing, to minimize the owner-occupancy requirements for specific condo developments.

Under the previous FHA rules, the approved condominium developments should have at least 50% of their units inhabited by owners.

The new rules took effect immediately. With these, the requirements is lowered to 35% for condo developments that are already existing given that their project satisfies specific conditions.

In an FHA statement, it was said that even if a few owner-occupants detract a project’s viability, too many can also harm the marketability. Further, it added that FHA’s position is to have owner-occupants stabilize the projects’ financial viability.

As stated by FHA, for a few condominium projects, the current owner-occupancy requirement is needed in order to maintain the FHA’s Mutual Mortgage Insurance’s stability.

However, FHA mentioned that, in specific situations, it believes the MMIF can be protected while still agreeing to minimize the owner-occupant percentage.

Eligibility to the minimal owner-occupancy rules

For eligibility, the condo development should be a year or older. Additionally, the requirements are:

  • The applications should be sent for processing and review with the HUD Review and Approval (HRAP) option.
  • The financial documents should furnish subsidizing of replacement reserves for the capital expenditures and the deferred maintenance in accounts constituting a minimum of 20% of the budget in the condo development.
  • Not more than 10% of all units may be in arrears on the condominium association fee payable.
  • An acceptable financial documents from three years should be provided.


The signing of this new law is especially important for individuals, where some are considering those condo for rent Pattaya or owning apartments in bustling Asian cities, since this is another option for them to acquire properties without looking elsewhere around the world.