FHA Verification – A Tale of Shakespearian Proportions

by Peter Thomas Ricci

Rose Dante is an agent with Baird & Warner in Chicago.

FHA-approved or not FHA-approved? That is the question.

You’ve been there – looking up condo listings for a client who is FHA-approved, only to find out the overzealous list agent just marked every available sales option on the MLS.

Experience has taught me that even though the MLS says FHA-approved, verify first!

The first method of confirming is the HUD.gov website. There is an incredibly helpful search engine through their site that will allow you to look up by association name or simply city, state and ZIP code. They list out associations who currently have and have had FHA approval in the past. This includes dates of approval and expiration. If it’s not listed on this site, it’s not FHA-approved.

FHA-approved properties are harder to come by these days, and the conversion is not impossible. Working with the right people will help ease the process. Teresa Giannini of Great Lakes Home Mortgage has converted non-FHA-approved buildings for me in the past and made deals happen. This is what I’ve learned working with her.

  • The building must be 51 percent owner occupied.
  • No more than 15 percent of the owners can be delinquent on their assessments.
  • One entity cannot own more than 10 percent of all the units.
  • Budget must have reserves separate from the operating account sufficient to cover deferred maintenance.
  • No current special assessments.
  • No pending litigation.

These are basic rules that must be met in order to comply. In addition, the association must supply:

  1. Recorded condominium declaration.
  2. Recorded plat with legal description.
  3. Recorded covenants, conditions and restrictions.
  4. Signed and adopted bylaws.
  5. Articles of incorporation.
  6. Recorded site plans.
  7. Plan or evidence for transfer of control of association.
  8. Proposed or active budget management agreement (if applicable).
  9. Proof of floor insurance or flood map.
  10. Letter regarding special assessments.
  11. Letter regarding litigation.
  12. Certification for owner occupancy.
  13. Certification for completion of common areas.
  14. Attorneys opinion letter regarding condo decs.

The turn is around 30 days for a response, once all documentation is submitted. Although this all seems like a lot, it’s a small price to pay to convert an entire building. With the strict guidelines of a conventional loan, many are left with no choice but to go FHA. There is no need to walk away from buyers who are unable to purchase conventionally…we just need to think UNconventionally!

Rose M. Dante is a Realtor with Baird & Warner, Edgebrook. She can be reached at:
5430 West Devon
Chicago, IL 60646
773.574.7271 cell
773.775.1855 office


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