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FHA Approval

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FHA Approval

An FHA loan usually requires the lowest down payment when purchasing a home, only 3.5% of the sales price. It also allows for lower scores than conventional loans, usually down to a 580. You may be able to roll your closing costs in to your loan. The home must be the borrower's primary residence. FHA is often the best loan program for first time home buyers. If you already have an FHA loan, you can refinance with FHA Streamline to lower your interest rate.

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Are you wanting to purchase a new condo with an FHA loan? Did you know that not all condo developments have FHA approved condos? Here are several tips to help you find an FHA approved condo and keep the process hassle free. Are you overwhelmed and don’t know where to start? We have loan specialists standing by that can help you get your loan application approved; contact us today for a personalized loan consultation.

FHA Approved Condos

Finding FHA approved condos isn’t as difficult a task as it sounds. There is a list maintained by the United States Department of Housing and Urban Development (HUD) of condominium developments it will approve for FHA financing. There are a number of factors the government looks at before approving a condominium development for FHA backed financing.

FHA Approved Condo Requirements

For a condominium development to qualify for FHA financing it must meet the following guidelines.

- The project must be at least 50 percent owner occupied. No more than 50 percent of the units can be rented out for the complex to maintain eligibility. 

- There cannot be pending litigation against the homeowners association.  

- At any given time, the association dues cannot be 60 days delinquent for 15 percent of the owners.

- The homeowners association must maintain sufficient insurance on the property. 

If your condominium has a good homeowners association they should have no problem maintaining their eligibility for financing.

How to Find FHA Homes

Before you start shopping for FHA approved homes it’s best to visit the FHA website and search for approved condos in the area you’re looking to buy. This will save you the time and frustration of finding a condominium you love only to discover it isn’t on the approved list for condo financing. 

If you’ve already found a condo that is not on the approved list you might still be able to qualify for a conventional condo mortgage loan. If a traditional mortgage isn’t an option because of credit or documenting your income there are specialized programs from private lenders that offer programs for no doc and bank statement loans.

FHA Condo Approval Status

If you have already found a condo and it doesn’t appear on the list or has an expired or rejected status it could be very difficult to be approved for a loan. Getting a development on the approved list is a tedious process that the homeowners association must follow and comply with all HUD guidelines. Homeowners can pressure their associations to get the development approved because it can be more difficult to sell condos in non approved developments.

Condo Purchases Can Be More Difficult Than Single Family Homes

You might think that “a home is a home” so why should it matter if mine is a condominium? The differences between a condo and a single family home translate to increased risk for lenders and the FHA. You own your condo inside your walls; common areas are shared equally with the other homeowners. This includes common parking areas, sidewalks, along with the pool and fitness center if applicable. 

The FHA and HUD minimize their risk by ensuring that the condominium association is enforcing association rules and dues are being paid consistently. These factors impact the marketability of any given condominium in the development. No lender wants to get stuck with a unit they cannot sell due the fault of the association or an individual owner; HUD guidelines help ensure this doesn’t happen.

FHA Loan Advantages

You might have a good credit score, the required down payment and an excellent debt-to-income ratio; however, if your condo development doesn’t meet the requirements you cannot be approved for an FHA loan. FHA loans are commonly used by homeowners with credit challenges to purchase homes they might not otherwise be able qualify for a mortgage loan.

FHA loans can be great for first time buyers thanks to lower requirements for credit scores and down payment. Condominiums are often more affordable than single family homes in the same area and often come with amenities like fitness centers and swimming pools.

Are you ready to begin shopping for the condominium of your dreams? Loan specialists are standing by to help you find an approved condo and secure the financing you need to close the deal. Contact us today for personalized help with your condo purchase loan.