April 9, 2012
A reader asks, “I own a unit in a condo building. I would like to buy another unit in the building, but I have been told by the board I cannot due to the FHA rule that not more than ten percent of the units in the building can be rented out.” “Of course if I bought the unit, I would then rent it out. Otherwise, the building could loss FHA financing.
September 21, 2011
FHA condo loans differ greatly in some respects from typical, single-dwelling properties that make up a large portion of the FHA insured mortgage loans. Condos are unique properties–the multiple individual owners residing in a shared building have different agreements, covenants and requirements for condo living than their suburban home-dwelling counterparts. But in some cases, rules for FHA condo loans resemble suburban home loans a great deal. For example, FHA loans allow a borrower to purchase a mixed-use property under a set of conditions which include the requirement that no more than 25% of the total floor space be used for non-residential or commercial purposes. When it comes to these mixed-use mortgages insured by the FHA,
September 21, 2011
Some FHA loan applicants are surprised to learn that FHA loans are available for condominiums. A condo, by definition, is a building that offers titles for individual units within the common structure. The FHA has rules for condo loans, including a requirement that the condo be on a list of projects approved by the FHA. Some building owners decide to convert their property into condominiums so they can sell the individual units. The FHA will consider such conversion projects for approval provided the condo units meet FHA standards. Such standards include a “one unit, one residence” requirement; each unit must be a separate entity and must be sold and occupied as such. FHA loan applicants looking for condo projects often wonder if the FHA will insure condo units in a | more...
August 24, 2011
FHA loans aren’t just for typical suburban homes–borrowers can apply for an FHA insured mortgage on many different types of properties, including condominium projects. It would be easy to assume that FHA loans are only for existing condo projects since FHA guidelines state all condo loans may be issued only on FHA-approved condos. But FHA loans may also be issued for condo conversion projects if they are approved and meet FHA requirements. One of the first hurdles for a condo conversion project to clear in order to be considered for an FHA insured condo loan is the definition of “conversion”. According to FHA rules, “Conversion to a condominium regime occurs in those projects which involve
July 27, 2011
FHA loan applicants looking for a condo loan have several options open to them when it comes to finding a project that is FHA-approved. The Department of Housing and Urban Development along with the FHA maintain a list of approved condo projects eligible for FHA loans, which is searchable by city, state, and other factors. You can find that list here: https://entp.hud.gov/idapp/html/condlook.cfm But is the existing list the only resource FHA borrowers have to find a condo project? What if the buyer finds a suitable condo that is not yet FHA approved? Thanks to the Housing and Economic Recovery Act (HERA) of 2008, changes have been made to the FHA condo project approval process, effective for all case numbers issued after December 7, 2009. According to the official site, “FHA | more...
July 20, 2011
In our last blog post we discussed FHA rules on condo units that affect their eligibility for FHA mortgages. The FHA does not approve condo loans for any property that features deed restrictions which penalize the borrower for selling or transferring ownership of the condo to someone else. FHA regulations state that any property purchased with an FHA mortgage must be freely transferable without penalty. But those aren’t the only requirements on FHA condo loans. FHA rules include provisions for proper documentation (in conjunction with applicable state law) of homeowner’s agreements, and statements of understanding between condo owners about shared responsibility for property management. FHA borrowers new to condominium ownership might not know that the responsibilities of condo ownership include shared duties and costs such as facility maintenance, code compliance, | more...
July 20, 2011
There are many differences between the different types of FHA loans available; there are new purchase loans, FHA construction loans, home equity conversion mortgages, and many other types. Just as there are different types of loans, there are also many different kinds of property you can buy with an FHA-insured mortgage. Mobile homes, mixed-use property, multi-family units, and condos can all be purchased with an FHA loan if the properties meet FHA requirements. When it comes to buying a condo, the loan approval process is more unique than for other types of properties. Condos, unlike a traditional suburban home, must be approved by the FHA and included on the list of FHA-approved process. A typical suburban home would require an FHA appraisal, but a condo must be on the FHA’s | more...
July 4, 2011
When an FHA loan applicant wants to get a condo loan, they are only permitted to get loans for FHA approved condominium projects. Condos must meet certain FHA requirements in order to be approved. Those requirements aren’t limited to the usual minimum property requirements, they also include how many units can or must be sold with FHA insured loans and other rules unique to condominium loans. One aspect of condo loans borrowers might not be aware of is that the FHA may withdraw its approval of a particular condo project. The property that fails to meet FHA requirements for approved condos may lose its approval, directly affecting those interested in purchasing units in that building and those who want FHA refinancing for units already purchased. According to the FHA, “Generally, | more...
June 29, 2011
In previous blog posts, we’ve discussed the different types of FHA loans available and the various types of properties that can be purchased with an FHA insured home loan. Those properties include typical suburban houses, manufactured homes, multi-family units and condominiums. FHA condominium loans are more complex than other loans because the FHA has requirements when it comes to these loans. Borrowers can’t purchase just any condominium unit–it has to be on the FHA’s list of approved condominium projects in order to be considered for an FHA mortgage. That’s one reason why the FHA publishes a searchable list of approved condo projects on its website at https://entp.hud.gov/idapp/html/condlook.cfm. What does it take for a condominium project to be approved by the FHA so a borrower can apply for a loan to | more...
February 28, 2011
First time home buyers often don't know where to start when it comes time to find that first home. Locating properties for sale isn't challenging--there are plenty of for sale signs in or near practically every neighborhood and even more to browse in the local papers and online real estate listings. But finding the home is only part of the challenge. Where does a buyer find a suitable lender? A buyer who wants an FHA home loan might not know where to start looking to find a lender. Conventional borrowers have it easier--any suitable bank with the right terms will do.