Condo Owners: Do you incur additional risk to admit a new co-owner to your Assn. with FHA financing?

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I would vote no.

Condo Owners: Do you incur additional risk to admit a new co-owner to your Assn. with FHA financing?

I have seen provisions like this in condo by-laws before and they exist mostly to attract "better off" residents but occasionally these types of clauses exist to protect the condo association autonomy from FHA guidelines. FHA has its own set of rules to identify a property as being fit and safe including things like exterior hand rails with a certain amount of steps (I think 3 or more) and other exterior requirements. To not allow an FHA buyer doesn't subjugate the condo association to these rules.

You are right to be wary of an FHA buyer being a credit risk, but it is not true 100% of the time. Still, if this buyer really wanted the property, and they weren't a credit risk, they could simply opt for a different loan program. I think you should keep the bylaws as they are.

By the way, FHA doesn't pay the mortgage on a defaulting borrower. They pay off the loan to the primary lender and sell the property themselves (including the monthly fees in arears when the property sells).

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Condo Owners: Do you incur additional risk to admit a new co-owner to your Assn. with FHA financing?

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