October 27, 2020
There are some common questions about what is permitted with an FHA mortgage and what is not permitted.
All borrowers should make the most fully informed decision about buying a home possible–know your options before you apply! Remember that there’s not one catch-all loan for all property types–there are different FHA home loan products for different property types.
Can I Use An FHA Loan To Buy A Condo Unit?
The short answer is yes, but FHA condo loans are allowed when the condo unit is on (or added to) a list of FHA approved condo projects. Once that requirement has been verified, the condo must also meet FHA minimum standards and local building code.
The condo project must not require the FHA borrower to agree to restrictive covenants that limit the borrower’s ability to freely sell or transfer the condo–such as the right of first refusal in Condo Owner Association bylaws or agreements.
Can I Use An FHA Mortgage To Buy A Mobile Home?
As with condo units, FHA purchase and refinance loans are available for mobile homes, manufactured homes, and modular housing that meet FHA loan appraisal requirements.
However, one condition of loan approval is that the mobile home must be affixed to a permanent foundation and must be transported directly to the site from the dealer or manufacturer.
Can I Use An FHA Single-Family Home Loan To Buy A Non-Residential Property?
You can’t buy a property that has no residential nature whatsover, and in the cases of mixed-use property, the primary use of the home must be residential and all non-residential use of the property must be “subordinate” to the use of the structure as a home.
FHA loan rules address the specific use of the property, but if you have questions or concerns about zoning issues your questions must be directed to the lender or the local authority–the FHA does not generally address zoning issues in its lender guidelines.
Can I USe An FHA Mortgage To Buy And Repair A Home At The Same Time?
There is an FHA mortgage known as the 203(k) Rehabilitation loan which includes funds for both purchase and repairs of properties. You can use this loan to buy a fixer-upper or repossessed home.
Be aware that depending on the lender, you may or may not be allowed to act as your own contractor, but in any case, you cannot use the funds from an FHA Rehab loan for other purposes not related to the renovation.
Can I Use An FHA Mortgage To Refinance A Non-FHA Loan?
Yes. While not all FHA refinance loans allow you to refinance a non-FHA mortgage, the most important ones do permit this. FHA loans can be used to refinance mortgages to get the borrower out of an adjustable-rate loan and into a more predictable fixed rate mortgage.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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