FHA Spot Approvals; We Are Getting Them Already

    I mentioned a few times now how HUD is now granting “Spot Approvals” for FHA financing for single condo units within condo complexes that are not FHA approved.

    We have already made several requests for spot approvals and have received answers in about a week each time.

    To obtain a Spot Approval we need the address of the specific unit and we need the HOA’s assistance in filling out the required HUD 9991 form.

    Once completed, we send the form to HUD along with other required documents and wait for the approval.


    Even though we are currently getting our answers back from HUD within about a week, we are still requesting 30 to 45-day escrows for every purchase that requires a Spot Approval.

    This is b/c we have to rely on both the HOA and HUD to get back to us and we have no control over either entity, and HUD in particular can be very fickle.

    Below are a few key factors that HUD considers before issuing a Spot Approval

    • FHA Concentration Rule: No more than 10% of the units can have FHA financing if the complex is larger than 10 units; No more than 2 units can have FHA financing if the complex 10 or fewer units.
    • Owner-Occupancy Ratio: The owner-occ ratio has to be over 50% (unlike Fannie Mae which has no owner-occ ratio requirement for owner occupant buyers).
    • Commercial Space: No more than 35% of the complex can be deemed “commercial.”
    • Owner Concentration Rule: A single investor may not own more than 10% of the units in a complex with 20 or more units; and no more than 1 unit if a complex has less than 20 units.

    But the main point is that Spot Approvals are available now, and we are getting positive responses already from HUD.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (855) 855-4491 | DRE# 01524255, NMLS# 310167

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