Changing Condominium Rules Affect Frederick Buyers

Financing News For Your Frederick Condominium


By FrederickBooster

Condominium rules have changed drastically since the “housing meltdown”.  FHA recently (Oct. 1) drafted newer, stricter rules for approval of Condominium Developments seeking FHA financing.
Condominium ownership is different from townhouse or single-family ownership, which are called “fee simple”.  The entire development must meet certain rules for even a single unit to receive FHA financing.
FHA used to allow relatively simple Spot approvals for condo’s that were not approved by FHA.  Now it is a major process so lenders are not taking the risk to do it for one unit, on a building that is not already FHA approved.  This has greatly diminished FHA financing on condos.
Conventional financing process is much more involved than previously.  It requires an analysis of the condominium development’s budget, bylaws, and a questionnaire that the lender provides.
Waterside Condominiums
Condominiums in Waterside
The usual deal killers are as follows
  • Condo dues delinquency greater than 15% (with so many condo’s in foreclosure, there are lots of unpaid dues adding up.)
  • Investor concentration too high (there is no set figure for owner occupied purchases but lenders get nervous when the amount of investor-owned units is over 40%)
  • Pending litigation, and
  • Insufficient budget.
There are others, but those are the usual suspects.
Forget new condos less than a year old, they never fit.
The list of specific condo developments that do not meet the criteria is a moving target. One could fit one month and not the next, and vice versa. One can lookup approved FHA condos by county on the HUD Website.
This is partly why condo prices have declined at a faster pace and at a greater percentage that single-families and townhouses. They will likely continue to do so as more of them become “un-lendable”, and therefore fill with more investors paying cash or using unconventional financing sources.
A guest post by:

D. Michael Giampietro

VP/Branch Mgr
M&T Bank/Mortgage Division
195 Thomas Johnson Dr., Frederick,MD 21702
301 846-2063 office
301 846-2097 fax
301 639-3968 cell  800 380-2193 x2063 toll free
Thanks Mike!
As of Today, Condominiums in Ambertowne and Frederick Heights are not able to be purchased with FHA financing.


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Chris & Karen Highland *    301-401-5119
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Karen Highland

I'm a real estate agent, real estate blogger, communications director, a wife, mom (empty nest - yay!), dog-lover, and wine-lover. Frederick Md is a great place to live, work and brag about! The Highland Group. 301-401-5119 Google

One Comment:

  1. Roberto Burgos

    I’m a little confused by this sentence:

    will fit one month but not fit the next month

    what does the “fit” mean?

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