FHA rental percentage

Started by FredB4 • 5 replies • 2772 views

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FredB4 (Ohio)
Posts: 375

Posted:

I recently spoke with a mortgage lender at a local bank who told me that they would not give loans for associations with rentals above 30%. This is becoming a problem for our association as most people looking to buy in this market want rental properties. Our Declaration of ownership requires a 90% vote to change the rental clause and that would take a miracle.
She also told me that the latest info she had from the FHA was that they were raising their requirement from 50% to 35% renters VS resident owners.
I have not seen anything about this anywhere else and the Gov website says nothing about a change to that requirement.I'm wondering if she was mistaken.

Has anyone else seen or heard anything about this ?
Thanks,
Fred

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The form they are referencing is called a "PUD Rider". It is filled out by the HOA to account for the condition of the HOA in a nutshell. That includes the ratio of renter ownership. You may also recognize this as an "appraisal" form the actual property appraiser uses. Just in case you want to actually see where this information comes from.

As for the increase/decrease of ratio of renters. I think it depends on the area and the trends for that area. Sounds like FHA loans are now wanting to get out of that area. So future owners may not be able to get a FHA loan but they can get others.

Former HOA President

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Fred,

You might also want to check Fannie Mae and Freddie Mac mortgage underwriting requirements. Fannie, Freddie, and FHA all have similar guidelines and sometimes changes in one set of guidelines precedes changes in others.

There are more than just the restrictions on the ratio of rentals to owner-occupied units. There are also rules regarding delinquinces, reserve requirements, and (for new developments) percentage of completion (sold).

The requirements keep getting tougher.

PetunkaM (Florida)
Posts: 1,009

Posted:

Recently, a friend obtained a mortgage in Florida but one of the restrictions states that she cannot rent her home at all. She can use it only for her pleasure and only as a second home. This however, will not stop investors who pay cash from renting homes providing HOA covenants allow it.

AnnJ1 (Florida)
Posts: 122

Posted:

Hi Fred,

The new FHA policy for Condominium Projects is:

Owner-Occupancy Requirements for established projects..... "Owner-occupancy requirement is 50% of units.

Owner-Occupancy Requirements for NEW CONDO PROJECTS.......New owner-occupancy requirement is 30% for new construction/existing projects less than 12 monthas old.

Rules effective as of July 1, 2011

The above info was published by the National Association of Realtors...
http://www.realtor.org/wps/wcm/connect/74a0aa00476e9b5c86bfafaa3b85ca9a/FHA_Condo_Rules_07.01.11.pdf?MOD=AJPERES&CACHEID=74a0aa00476e9b5c86bfafaa3b85ca9a

Additionally, here is a link to the current (June 30, 2011) FHA Condominium Project Approval and Processing Guide.....
http://www.caionline.org/govt/news/Political%20HeadsUp%20Public%20Document%20Library/Mortgagee%20Guide%202011-22.pdf

HTH

Ann

FredB4 (Ohio)
Posts: 375

Posted:

Thanks, as always, for the helpful responses.I have a lot to learn about this topic.
Fred

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