Buying A Condominium With An FHA Loan
If you're a first-time home buyer in a fast-paced market, it can make sense for you to purchase a condo as a first home. Condos have many benefits for first-time home buyers: they are easier to maintain, lower priced, and often located centrally within a city. But many first-time buyers also want to purchase their home with a Federal Housing Administration (FHA) loan, and this can be a challenge.
Finding FHA-Approved Condominiums
The FHA maintains a list of approved condominiums within each area. Additionally, the FHA will set certain price caps on different types of housing; because the loan is designed to get first-time home buyers into reasonable properties, they generally will not finance extremely expensive properties. By going to the Federal Housing Administration's website, you'll be able to look through the buildings that qualify for FHA funding. You can then find out whether or not there are units in the building available for purchase.
Looking Up Owner Occupancy Rates
Now, just because a condominium is FHA approved does not mean that you can necessarily get a loan there. It just means that it's possible to get a loan there. There is still one additional requirement you need to meet: the owner occupancy of the building has to be 50% or above. This is for a couple of reasons: condos that have high owner occupancy rates tend to be maintained better, and owners tend to be more likely to continue residing in the building if there are more owner occupants.
Now the bad news. If, at any time, the owner occupancy rate falls below the minimum, you will be unable to purchase the house on an FHA loan. If you're looking at a building that is currently at 50% owner occupancy and it drops to 48% just before the loan closes (very possible if someone moves out), your loan will fall through. On the other hand, if the occupancy rate is 80% or more, it's not likely to become a problem.
Getting a Condo FHA Approved
If your condominium building is not FHA approved, it's possible to get FHA spot approval for the condo -- or even to get the condo itself approved. The FHA has a fairly rigorous and substantial process for approving condos, however, and it's also expensive. If you want to go this route, it may end up costing you a lot of time. If you want to go this route, it's a good idea to consult with a real estate attorney rather than a realtor or real estate professional, as they will be well-versed with the laws involved.
Though buying a condo with an FHA loan can be difficult, there are also many benefits. An FHA loan has lower credit requirements and is more affordable for the buyer, thereby making it easier to procure a house faster. A mortgage provider will be able to give more information about the process.
For more information, visit sites like http://www.republicstatemortgage.com.