On Oct. 26, 2016, the Department of Housing and Urban Development (HUD) issued a mortgagee letter making changes to the Federal Housing Administration's (FHA) owner-occupancy requirement for condominiums in accordance with the requirements of H.R. 3700, the Housing Opportunity Through Modernization Act of 2016 (HOTMA). Under the new provisions, FHA approved condominium projects require at least 50% of the units to be owner-occupied, but will allow for the owner-occupancy requirement to be lowered down to 35% if:
- The project has replacement reserves of at least 20% of the budget,
- No more than 10% of the units are in arrears (more than 60 days past due), and
- The condo has three years of acceptable financial documents.