FHA Approved Condos

If the condominium lifestyle is for you, perhaps FHA approved condos are something you should consider.

What are the FHA Qualifications?

HUD, or the Department of Housing and Urban Development, offers qualified condos for sale that can be financed with an FHA, or Federal Housing Administration, loan. While HUD lists the condos for sale and FHA guarantees a portion of the mortgage, neither organization actually lends money to condo seekers.

Condo buyers should visit a Realtor in their area who can give them a list of FHA approved condos listed by HUD and arrange to make visits to these units. FHA approved condos are the result of former owners who defaulted on their loan payments.

An FHA approved condo will require you to pay cash or take out an FHA mortgage with a financial institution. Once you find the condo you want to buy, your next step is to meet with an FHA approved lender to help you arrange the loan and purchase the condo.

The HUD Hot List offers a list of FHA approved condominiums where you can search by state, city or zip code. It is a good idea to begin your search here prior to visiting your Realtor.

• Search – Search for HUD condos in your area using the HUD Hot List.
• Visit – Call your Realtor and ask to make appointments for the condominiums on your list. You may also consider a drive-by so you can get a good look at the area where the condominium is located.
• Occupancy – In order to get that FHA loan, it will require that you intend to occupy it and not rent it out. If you are searching for multiple condominiums to purchase as an investment, at least 50% of the condos you purchase in any given condo community must be owner occupied, not rented.
• Legal Issues – Inquire with the homeowner’s association regarding any legal issues such as back dues. The FHA doesn’t normally approve deals where legal issues are involved.
• Make an Offer – This is where you will work with your Realtor. Make sure your offer is the market value or appraised value, as FHA loans won’t be approved for offers that are less. If your offer isn’t accepted initially, it may be because the condo is under contract with another buyer or in a pending status, meaning you still may have a chance. If the condo does sell to another buyer, begin your search again.
• Get the Loan – Use the FHA approved lender search engine to find a lender in your area that offers FHA loans. You can also contact your bank to inquire if they are an FHA approved lender. You Realtor can also help you find an FHA approved lender.
• FHA Loans – Currently, the FHA is guaranteeing loans where only a 3.5% down payment is required compared with 10% on conventional loans. In addition, new rules for FHA approved condominiums have evolved. If you are trying to purchase a HUD condo in a certain community of condos, the FHA now requires that only 30% of those condominiums be eligible for FHA loans. Therefore, if you are turned down for the loan, it is because 30% of the condos in the community are already under an FHA loan contract.

Visit the FHA’s Buy a Home web page to find answers to all of your questions on the FHA loan process and how to obtain a loan for an FHA approved condo.

• Rent to Own By Owner
• List of Popular Mortgage Companies
• FHA Loan Guidelines

• FHA Mortgages and Home Inspection Requirements
• Help for Single Moms to Buy a House
• Escrow
• FHA Debt to Income Guidelines
• Free Home Inspection Forms