Friday, June 26, 2009

FHA Condo Information

FHA loans are great loans. However, if you're thinking of FHA financing for a condo, there are some important things to keep in mind. All condo projects must be approved by HUD, but don't assume that if a project has already been approved, you are good to go for an FHA loan. There is also a review process that FHA requires when someone applies for an FHA loan in an approved project. Here are some of the things that are checked:

• A single investor cannot own more than 10% of the units.
• The number of units that are in arrears (more than 30 days past due) on their HOA fees is limited to 15% of the total units.
• 50% of the units must be sold or pre-sold (a sales contract and loan approval will prove it is a valid pre-sale).
• At least 50% of the units must be owner-occupied (second homes can count as owner-occupied if they are not vacation homes and if the owners spend less than 50% of their time living there).

There are other restrictions as well, but these are the biggies.

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