FHA Guidelines for Condos
One branch of the Housing and Urban Development (HUD) Department is the Federal Housing Administration, abbreviated FHA. The FHA is the government body which is tasked with administration and dispensation of home loan insurance.
The main purpose of the FHA loan insurance is to help first time buyers obtain loans by covering the risk to the lender up to a certain point.
Lenders don’t usually trust first time home buyers since they know nothing about them, but are more likely to consider giving them a mortgage if they have the assurance of coverage from the FHA.
There are a number of home loan programs available through the FHA, the main one being the 202 (b) program for new homes—but did you know you can also get FHA condominium loan insurance
Why Choose A Condo
Lots of people choose to live in a condo instead of in a house, and the government recognizes the need to help out condominium buyers. That’s why they created the 234 (c) program. The program insures a loan on a condo for up to 30 years.
In order for a condominium building to qualify under FHA guidelines, it will need to have at least four dwelling units which are detached or semi-detached, take the form of row houses, or use walkups or an elevator for access.
The FHA program for condos helps buyers to obtain loans they would not necessarily qualify for without assistance, and also to pay less of a down payment.
To get into program 234 (c), the condominium you are looking into buying will have to meet the guidelines above, and your benefits may also be limited by how many condo units you are purchasing and where they are located.
Another thing to be wary of is if you are trying to get assistance for a condo which is being converted from standard rental housing (apartment status). Usually you can’t get assistance in this situation, unless certain guidelines are met.
You must have already been a tenant of the apartment, and the conversion must have happened more than a year before you applied. The conversion itself must have sponsorship from a majority of households being converted. This is pretty restrictive, so don’t count on it if your property is about to be converted.
You may wish to find another condo. If you’ve been struggling for a year since your apartment was converted though, you may be able to use FHA to help you stay in the condo.
What other requirements do you need to meet in order to qualify for Section 234 (c) of the FHA guidelines? You yourself will have to have good credit to get the government to insure your condominium loan.
The condo you want to apply for will need to be your principle place of residence. Also keep in mind that the condo you will be living in could undergo numerous other changes and transitions over the future years, so be certain this is the lifestyle which you want to invest in before you commit yourself.