Bellevue Condo Blog and Community Information

It’s been 13 years since the FHA changed its approval process for insured mortgage financing on individual condo units. But late last week the FHA transferred authority directly to the lenders who can now determine if a condominium project, after meeting FHA-HUD regulations, is eligible for the insured financing. If the building has not yet completed all the requirements, the lender can offer “spot approval,” financing that can be funded on a limited basis and which takes the burden off the buyer. Buyers can now put down a lowest-ever 3.5 percent on approved condo buildings –– incredible in the condo market of today, where even buyers with good credit ratings are having a hard time obtaining a loan. An extra bonus is that this down payment doesn’t have to just come from your own personal funds; it can be a gift from a family member, or even a grant from a down payment assistance program. The requirements to meet FHA approval are strict and include the following: • Project (building) must be complete.• 51 percent of the units must be owner occupied.• No more than 10 percent of the units in a building with 30 or more units can secure FHS insured mortgages; and no more than 20 percent in a project with less than 30 units.

• The building must have been association-run for a minimum of one year.

• 90 percent of the units must already be sold.

To look up a specific property, go to this HUD Web site and search by address and zip code to see if it’s already been approved:

Although compiling all the information necessary for FHA spot approval can be quite time consuming, it’s worth the wait for condo buyers who wouldn’t otherwise be able to purchase a home. For condo buyers and sellers, we should all look at this as a terrific tool for turning what has been a frustrating market into one of possibilities.

Buyers should verify FHA requirements with their lender.

Tags: FHA loans

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