Did you know that you can use FHA financing to buy a condo? While it’s not as easy as buying a single-family home, it can be done. The first step is to find out if the condo is on the FHA approved condo list. If it’s not, you may still be able to buy the condo, but it will take more time and effort.
What is the FHA Approved Condo List?
The FHA Approved Condo List is a list of condos the FHA already evaluated and approved for FHA financing. If you are able to find a condo on the list, you don’t have to go through the approval process for the condo itself. The only thing you have to worry about is the unit itself passing the appraisal. That’s on a case-by-case basis.
Condos on the FHA Approved Condo List meet the FHA guidelines. This means that the condo development itself meets all FHA rules. This includes things including:
- The development is complete
- The development isn’t used for commercial purposes
- One person doesn’t own a majority of the units
- The units aren’t used as condotels
- The association’s finances are in good order
- The association has a good budget
- There isn’t any litigation against the development/association
Using the FHA Approved Condo List
You can use the FHA approved condo list to search for condos. You can search by state, county, city, or zip code. After inputting your information, the system will provide you with a list of approved condos in the area. You can share the list with your realtor to help you find an FHA approved condo.
What if a Condo Isn’t on the List?
The list is great, but what if you find a condo that isn’t on the list? If you still need FHA financing, you’ll have to ask the lender to get the development approved. The process can take 30 days or longer, so make sure you account for that time. Also, know that the association is not under any requirement to go through the process. If the association doesn’t want to deal with the approval process because it involves providing a lot of information and paperwork, they don’t have to.
Of course, it’s to the development’s benefit to get FHA approval. If the FHA doesn’t approve a condo association, no one with FHA financing can buy into the development. Since FHA financing is so attractive and easily accessible, it makes sense for most developments to try to get approved.
You can use the FHA Approved Condo List to your advantage to help make your search for a condo easier. But, if you fall in love with a condo not on the list, don’t be afraid to ask it the development can get approved. If it doesn’t meet the FHA guidelines, though, know that you will either need a different type of financing or will have to find another property.