The Federal Housing Administration is the Government agency responsible for creating FHA-approved condos. Developed in 1934 by HUD (the U.S. Department of Housing and Urban Development), FHA was designed in hopes of boosting homeownership in America. The FHA does not directly offer mortgage loans, however, they do ensure a loan by private lenders.
Regardless of your fears associated with homeownership based on a low credit score, a high down payment, or other financial issues, an FHA loan may help.
Am I a Good Candidate for an FHA Loan?
The guidelines for obtaining an FHA loan is more lenient than ever before. Today, an FHA loan could be easy to qualify for if you meet these requirements.
Good candidates for FHA loans:
- May have a low credit score.
- Prefer a low down payment.
- Receive a down payment as a gift.
- Have a high debt-to-income ratio.
- Are first-time home buyers.
What Are the FHA Condominium Requirements?
There are rigid requirements imposed by the FHA leaving the number of listings relatively small. Within this pool of available real estate, buyers receive approval and must submit paperwork before viewing any of the communities they are interested in. Then, any recommended improvements are made before the building is put on an approved list.
Here is a full list of FHA condo requirements:
- The property must be fully built and complete.
- Only 50% of the property space can be used for commercial purposes.
- Only 15% of the units can have delinquent dues (no more than 60 days).
- Only 50% of units can be investor-owned or rented.
- At least 10% of HOA’s income must go towards a reserve account.
- The HOA needs to have enough money in the reserve account to cover capital repairs and replacements for at least two years.
- The board of directors does not have the power to approve or deny a lease.
- Property insurance must be purchased.
There may be additional requirements to ensure the property remains in good standing.
What Does FHA Approved Condos Mean?
If you want to know about FHA loans or eligible condos for FHA approval, you may need to talk to a qualified professional about how FHA loans can help you. “Is my condo FHA-approved?” is also a common question for people who do not know what FHA-approved condos mean.
Here is more about Federal Housing Administration loans:
Small Down Payment
FHA loans require a small down payment that may be as low as 3.5%. That ultra-low down payment makes these properties very attractive to buyers as other lenders can require up to 20% for a down payment.
Low Credit Score
Even if you do not have a high credit score, the Federal Housing Administration offers flexibility. An FHA loan only requires a qualifying credit score of 500 with a 10% down payment, and 580 with a 3.5% down payment. Other properties may require a minimum score of 640 for approval.
While the limits of FHA loans vary, you can check the FHA mortgage limits on the HUD webpage. If you are unsure, remember that there are generally higher limits for FHA borrowers, and check with a professional.
Borrowers who need help may find more options with FHA loans. Many times, programs are available through the FHA for borrowers hit by economic distress.
Finding FHA-approved condos starts at home with a search on the HUD website. Go to the website, and take a look at FHA-approved condos in the search feature. Then, call a qualified real estate professional at the offices of Jeff Barchi. You can talk to a team member about FHA-approved condos available in your area, and soon you could be calling one “home.”