FHA Spot Loans

The FHA Spot Loan Program is designed to assist homebuyers in a successfully operating, non-approved, condo project where FHA involvement is limits.

Spot loans will insure any mortgage in a one family condo unit in a project coupled with an undivided interest in the common areas and facilities that serve the project. The project may include dwellings in detached, semi-detached, row, garden-type or low or high rise structure.

FHA Spot Loan Requirements

However, before an FHA spot loan to insure mortgagees against losses in these instances is approved, the following requirements must be satisfied:

• The condo project must be complete
• The association must have had control of the common areas for a year
• Proof of appropriate insurance must be supplied
• Individual units must be owned or be an eligible leasehold interest
• There must be undivided ownership of common areas by unit owners
• At least 90% of the unit must have been sold
• 51% of the project must be owner occupied with no single entity owning more than 10% of the units (depending on total units)
• The mortgage lender must perform due diligence that all criteria have been met
• The Direct Endorsement Underwriter Certifications must be modified and used accordingly

More information and specific details on FHA Spot Loan requirements can be found on the Department of Urban Housing and Development (HUD) website: http://www.hud.gov/offices/hsg/sfh/faqs/atl1val.cfm

Steve Wyrostek -HomeLoans.org Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.