June 23, 2015
Recently we posted about two types of property you cannot purchase using an FHA home loan: houseboats and recreational vehicles. The reasons you cannot get an FHA-guaranteed home loan for these things is because they cannot be affixed to a permanent foundation. So what kinds of property can you purchase–or refinance–with an FHA loan?
Many would assume that a typical suburban home is allowed, and that is true. But so are condo units in FHA-approved condominium projects, manufactured homes, and many other types of property you might not find in a typical neighborhood in the ‘burbs.
FHA loan rules currently found in HUD 4155.2 at the time of this writing spell out the list of properties a lender may offer FHA loans for. They include the following guidelines to the lender:
“FHAs programs differ from one another primarily in terms of what types of properties and financing are eligible. Except as otherwise stated in this handbook, FHAs single family programs are limited to one- to four-family properties that are owner-occupied principal residences. FHA insures mortgages secured by
detached or semi-detached dwellings
manufactured housing
townhouses or row houses, or
individual units within FHA-approved condominium projects.”
That looks simple enough, but the FHA rulebook further clarifies by offering a list of specific property types that cannot be purchased with an FHA mortgage. They include:
commercial enterprises
boarding houses
hotels and motels
tourist houses
private clubs
bed and breakfast establishments
fraternity and sorority houses
You might notice a common thread through most of the ineligible properties listed above–none of them are intended for single family, owner-occupied residences. The spirit and the letter of the FHA loan rules for single-family home loans involves getting affordable housing to financially qualified borrowers who intend to own and occupy the property at the time of closing.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: