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Can someone explain how FHA loans work with condos?

  • February 11 2010 - Brookline
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Answers (9)

Currently they are approved via HRAP or DELRAP....which won't mean a thing to you...nor should it.  Essentially Condos can be approved by a delegated underwriter and the information that is needed is not unlike what used to be required to get a FNMA or Freddie Condo approved before the spot loan approval process came out.

No one can give you a really good answer becuase the process is new and few lenders are actually doing the approvals.  I am in the process of getting my first condo approved since the change...My fingers and toes are crossed...
  • February 11 2010
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Profile picture for krock19
Thanks for everyone's input.  Unfortunately, we are not eligible for any of Mass Housings' programs.  Supposedly, the condo that we would like to put an offer on is 'in process' of being approved by FHA.  I'm not really sure what that means.  Does anyone know how long that will take?
  • February 11 2010
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Profile picture for shapiroamg
Have you considered Mass Housing? If you are a first time buyer and are under max the income limits, and have the min credit score, there are "some' people on this site that do offer that program. It is a good alternative to FHA.
  • February 11 2010
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Only condo's that are currently approved on the FHA list will allow for FHA financing-

based on that logic, FHA will no longer offer financing on condos after February 2012.
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Profile picture for Erez Cohen
To sum up what everyone has already said-  Only condo's that are currently approved on the FHA list will allow for FHA financing-  I do issue a caveat-  Even though the specific home may be on the list, I would carefully review conditions of the approval from FHA-  Some approval contain verbiage, "new budget needed, new quesitonaire, etc-" I would additionally review when the condo approval expires to make sure you are in the correct time frame for purchase.  Prior to Feb, 2010-  A condo would not have to be on the FHA approved list and financing still could occur if a Condo Spot Approval was done-  The policy has since expired.  I would not go the route to have the condo approved by FHA-  That is not your job-  The condo association themselves would have to go through that process-  You doing it on your own would cost you monies which may be fruitless as the unit may not end being FHA approveable-
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only projects already approved would be eligible for FHA financing.

Absolutely correct if your lender doesn't have the inclination to get the project approved.

If your lender is inclined; they'll follow the steps at this link:

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf
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the property doesn't need to be on the approved list at the time you locate the property. 

If it's not on the approved list (posted on FHA web site) then your lender can underwrite the property and get it on the approved list. If it's not on the approved list then you should allow 45 to 60 days to settlement and also be prepared that the property might not get approved. 
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FHA has an approved condo list. In other words the condo project is reviewed for a number of criteria and approved for financing. Not each condo. 
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Property must be on the approved list and can be purchased with 3.5% deposit. Condition of the unit is a factor and owner occupied ratios are a factor. Each loan is also unique to the borrower so consult a loan professional.
  • February 11 2010
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