Why Would a Condo Not be FHA Approved?

If you are tired of renting and are planning to buy your first home, a condo can be a good option for starters. A single-family home may be beyond your budget, but for a lower price point, condos offer much more than renting.

If you are using an FHA loan for financing, you should know that not all condos are eligible for your loan.

We look at why a condo will fail as an FHA-approved condo in California.

What are the instances when your condo won’t pass FHA approval?

Your condo won’t pass FHA approval for the following reasons:

  • If your condo is still being built, it won’t qualify. The HUD only approves condos that are completed.

  • You won't get FHA approval if more than 50% of the units are used as rentals or are investor-owned.

  • You can’t use an FHA loan if your condo is not insured.

  • If your condo association fails to keep at least 10% of the HOA budget in a cash reserve.

  • If more than 35% of the property is set apart for commercial use.

  • If you are buying a condotel.

  • If your condo is located in undesirable locations like near airports or landfills.

If you want to learn more about your FHA mortgage loan options, our loan officers can lend you a hand. Get in touch by calling or sending us a message today.

What are the advantages of FHA-approved condos?

  • Low downpayment, less stringent credit requirements, and backed by the government.

  • Gives more opportunities for families to own homes and build equity.

What do you need to plan for and prepare before you buy your condo?

Just like any other home loan, there are steps you need to take to have a higher chance of approval on your FHA loan. 

The first step is to get your credit scores as high as possible before applying for a loan. Next is to save up for your down payment. The FHA requirement is lower than 20% for conventional loans, but you must prepare for this amount. Prepare to pay closing costs and association fees. Finally, buy a condo within your budget.

Are you ready to buy your first condo?

With low down payment options, an FHA loan would save you a chunk of money on your condo purchase. If you are ready to purchase your new condo with an FHA loan, Nuline Funding of California can help you get started.

Our loan experts have helped many clients become condo owners through an FHA loan.

Set a meeting for a free consultation today. You can call or message our website to book an appointment. 

 


* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.