April 16, 2015
How much do you know about buying a home with an FHA mortgage? Do you know the kinds of property you can and cannot buy with an FHA loan? Here is a little list of what’s possible and what’s not. As you read about what you are permitted to buy with an FHA mortgage, remember that not all lenders offer all types of FHA home loans. You may find some lenders who do not issue FHA loans on mobile homes, others who may have higher FICO and other credit qualifying standards for the homes they do offer mortgage loans for, etc. Always compare lenders and shop around for the best deal.
“Existing Construction” Homes
An existing construction home is, as the name implies, one that has already been built. Existing construction may apply to homes that have already had one owner or are more than one year old (that may be subject to change depending on state law and other factors including FHA loan rules or changes to those rules over time). FHA loans are definitely available to purchase properties like these.
New Construction Homes
A home built to order with a construction loan or a home that has not been purchased yet and has had no owner may be classified as a new construction home. FHA loans are available for new construction homes, though in past years lenders have been more reluctant to issue new construction loans depending on circumstance and the qualifications of the borrower.
Mobile, Modular, and Manufactured Homes
FHA loan rules permit the purchase of these properties as long as they are affixed to a permanent foundation when the loan is closed or at such time as specified in the loan agreement or by state law. Borrowers may use an FHA loan to finance purchase of these propertie in conjunction with the purchase of land they are to be placed upon.
Houseboats, Recreational Vehicles, Homes Not Affixed To Permanent Foundations
FHA home loans are only available for homes that are taxed and legally classified as “real property”. A home that is not on a permanent foundation would not count as “real property” and therefore cannot be purchased with an FHA mortgage loan.
Condominium Units
FHA loans permit the purchase of condo units as long as the condo project is on the FHA approved list or can be added to that list. You would need to speak to a participating lender to see how a property can be added to the FHA approved list if it is not on the roster already.
Mixed Use Property
A home that has non-residential use may or may not be approved for an FHA loan, approved or denied on a case-by-case basis. Homes that have non-residential use in excess of 25% of the total floor space of the property are not eligible for an FHA mortgage.
Investment Property and Vacation Homes
FHA single family home loans are not allowed on any property the borrower will not immediately occupy (within 60 days) and use as the personal, primary residence once the loan is closed. FHA loans are not allowed for vacation homes or other “occasional occupancy” type residences.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review.
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.
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