FHA Approved Condos

If you are looking to buy an FHA approved condo you can, but there are some specific requirements that FHA approved condo.  Typically in the past, it was not recommended to buy a condo because they were hard to resell.  Families would opt for a house before a condo. 

There are a few things you’ll need to know when looking for an FHA approved condo. The first thing you should ask your realtor is whether or not any condos they are showing you are FHA approved.  If they are not, then everything is just a waste of time.  The properties when listed in MLS are generally noted as being an FHA approved condo. This is one rule there is no exception to.  When you are looking at a certain grouping of condos in an MLS, they are usually grouped according to whatever is in that town.  That would mean Riverside, Inland Empire, Los Angeles and so forth. 

The condo must be listed on the approved list.  Last year, the condo has the ability to be spot-checked, but that is no longer the case.  If you are looking at a condo, then it has to be on the approved list no questions asked.  If you can’t live without this condo, you can certainly have it submitted for review, but this process is lengthy and not recommended.

The condo must be in a development that has two or more units, and these units must have the proper liability and hazard coverage.  There are respective areas in which they must require flood coverage.  It can have “right of first refusal”, but this must fall under the Fair Housing Act.  Right of First Refusal is a contractual right that gives the holder the option to enter into a transaction with the owner of something before the owner is allowed to enter into a contract with a third party.  FHA just wants to make sure that this is not discriminatory.

FHA also does not want to see that the development exceeds 25% of its condos listed as commercial.  This could be a development that is partially business and partially residential.  You typically don’t see this, so it’s rarely a problem. 

FHA also requires that no more than 10% of its condos can be owned by one investor.  Clearly in many cases, it’s evident that if someone owned several units that they have quite a portfolio. The risk of default in owning more than 10% could be pretty good.  So, in order to keep the peace, this is also part of looking for an FHA approved condo.

There are many more small things to look for when buying an FHA approved condo. For more information please visit www.fhaloansnow.net.  Happy condo shopping!