Articles in Category: Condominium Mortgage

April 1, 2015

New Purchase FHA Mortgage Loans: Some Basics

If you are thinking about applying for an FHA mortgage instead of a conventional home loan, there are aspects of the FHA loan program you should know about before starting the house hunting process that will save you time. Knowing what types of homes you can purchase with an FHA loan, for example, will help you focus your efforts. FHA loan rules published in HUD 4155.2, the Lender’s Guide To The Single Family Mortgage Process, states: “FHA’s 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.” The FHA will not approve or guaranty mortgage loans that are secured | more...

February 25, 2014

FHA Home Loans: What The FHA Will And Won’t Approve

By Joe Wallace

If you’re looking for an FHA guaranteed home loan, it can be a very big help to know in advance what kinds of properties the FHA will and won’t approve loans for in its single-family home loan program. There are sometimes misconceptions about the FHA single-family home loan program; some borrowers are interested in loans for commercial buildings or properties, but single-family home loans are intended for purchasing a dwelling for the borrower’s personal use. The FHA’s list of approved and unapproved uses for an FHA mortgage make it fairly obvious how these loans can be used, but if you’re new to the program those details aren’t always as clear. You can save a lot of time knowing up front what’s allowed under the FHA mortgage program. The rules for | more...

October 23, 2013

FHA Loan Questions: Are FHA Loans Available For Condo Units?

By Joe Wallace

When you think about your choices for buying a home using an FHA mortgage, it’s easy to forget that all types of properties can be considered for purchase–not just a typical house in the suburbs. The FHA does allow loans for condo units, and there’s a section of the FHA loan rulebook (HUD 4155.1) that discusses the requirements for this type of purchase. According to HUD 4155.1 Chapter Four Section B, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured”. But what does the FHA define as a “condo”? How are they different than other types of housing? According to FHA loan rules: “A condominium is a multi-unit project that • has individually-owned units, which may be either − attached in one or | more...

April 1, 2013

FHA Condo Loans: What Defines A Condo?

By Joe Wallace

There are many different types of property you can buy with an FHA mortgage. Some borrowers are interested in suburban homes, others want a condo unit within the city. FHA loans do permit borrowers to buy condominium units with an FHA guaranteed mortgage, but there are additional rules for these purchases. One of the first things a borrower learns about purchasing a condo unit with an FHA mortgage is the rule found in HUD 4155.1 Chapter Four, Section B. It says, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured.” Discuss this requirement with your loan officer to learn more about the FHA approval process and how it works in cases where the condo isn’t currently on the “approved” list. The approval issue | more...

September 24, 2012

FHA Condo Project Approval Guidelines Change: Homeowners Association Rules

By Joe Wallace

We’ve reported many new changes to the FHA condo approval process that allows a condominium project to be considered for an FHA loan for individual units. Condo projects must be FHA approved before a borrower can apply for an FHA guaranteed mortgage on a unit in that condo project; that means a project’s compliance with FHA loan rules is very important. For example, a condo project may not be approved for an FHA mortgage loan if there are restrictions on the borrower’s ability to freely sell the property. The FHA has gone back and forth on an issue related to “the right of first refusal” which limits a borrower’s ability to sell. Condo loan applicants have reported problems with the right of first refusal clause, getting turned down for FHA | more...

September 19, 2012

FHA Condo Loan Rules: Pre-Sale Requirements

By Joe Wallace

The FHA recently updated its condo project approval rules to include changes in pre-sale requirements. FHA loan rules permit loans on condo units as long as the condo project is FHA approved. Part of the process of getting condo approval includes meeting FHA guidelines on critical areas such as pre-sale requirements. The new FHA loan rules for pre-sales are now updated. According to FHA Mortgagee Letter 2012-18, “The requirements of Section 3.4 of the Guide are replaced by the following updated policy guidance.” That guidance includes: “At least 30 percent of the total units must be sold prior to endorsement of a mortgage on any unit.

September 19, 2012

FHA Loan Rule Changes For Condominium Project Approval: Investor Ownership Guidelines

By Joe Wallace

The FHA and HUD recently updated condo project approval guidelines in the Mortgagee Letter 2012-18. The mortgagee letter states, “It was determined that certain policy adjustments were needed to address current housing market conditions”. The letter adds, “This ML is effective for all condominium project approvals,recertifications, annexations or reconsiderations submitted for review as of the date of this directive unless otherwise specified in a particular information block. This approval process will apply until August 31, 2014, unless further extended by FHA.” Part of the revised guidelines for condo project approval? Investor ownership rules. Under the section title, “Investor Ownership Section 2.1.4” you’ll find the following: “The requirements of Section 2.1.4, Investor Ownership are replaced by the following updated policy guidance. A unit that is occupied as a principal residence is | more...

September 18, 2012

FHA Issues Revised Condo Project Approval Guidelines For Non-Residential Use

By Joe Wallace

The FHA and HUD have issued revised condo project approval guidelines for a number of areas, including the rules governing non-residential use of condo project floor space. According to Mortgagee Letter 2012-18, “This Mortgagee Letter (ML) puts in place temporary condominium project approval guideline changes to some of the current FHA condominium approval policy provisions.” The letter also says, “These changes replace, for the period specified by this ML, certain approval requirements specifically identified in this ML that were established in ML 11-22 and the attached Condominium Project Approval and Processing Guide (Guide). It was determined that certain policy adjustments were needed to address current housing market conditions.” (Emphasis ours.) A section of the mortgagee letter addresses the FHA rule on non-residential use and/or commercial use of condo space in | more...

July 9, 2012

FHA Loan Reader Question: Condo Approval

By Joe Wallace

A reader asks, “I own one of the eight units in a condominium building. Where can I find the procedures to qualify the building for FHA approval ? Several of the owners want to sell their units and having FHA financing available for the potential buyers would be a great help.” In 2009, FHA loan rules for condo approval were changed. According to FHA Mortgagee Letter 2009-19, the the Housing and Economic Recovery Act (HERA) of 2008 fave the FHA the ability to modify approval procedures for condo projects: “FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD

May 7, 2012

Questions and Answers on FHA Condo Loans

By Joe Wallace

FHA home loans include loans for condos, but since condominiums have unique arrangements that can be much different than a traditional suburban home, there are additional rules that govern FHA condo loans. Here’s a list of commonly asked questions about FHA condo loans, and the answers to those questions. Is FHA condo project approval required for an FHA condo loan? Yes.