FHA announced major changes in its condo guidelines this summer, there were some negative changes such as the elimination of the FHA spot condo approval, which allowed for a single unit approval even though the entire condo project was not approved. Although FHA has since extended spot condo approvals until Feb 2010. Approval of condo complexes not currently on the FHA approved condo list will now have to be getting the entire project approved by either the lender or FHA. The details on this process are still somewhat murky and not defined. But some good news from FHA is that “site” condos no longer have to be approved by FHA in order to qualify for a FHA loan.
Site Condos are basically like single family detached properties yet fall under a condo style of ownership. Condo Project approval is not required for Site Condominiums; however, the Condominium Rider must be included in the FHA case binder submitted for insurance endorsement.
Site condos on their own lots in developments that have condo ownership and may have some common care covenants. These condo’s can now be financed just like single family homes. They do not have any of the hassles associated with getting a FHA loan on a regular condo.
Regular condo’s that are not site condos and not on the FHA approved list have become very difficult to finance. Conventional loans with less than 20% down can often require 70% of the units in condo projects to be occupied by owners among other onerous requirements. Many of the condo’s being purchase in California are with 20% down or all cash, because they are not FHA approved and do not have the owner occupancy to qualify under the Mortgage Insurance guidelines for a less than 20% down conventional loan.
So in summary, make sure you check with me first if you are shopping for a condo in California. I can check to see if it is on the FHA list if you are going with a FHA loan, I can check the occupancy if you are going with a conventional loan and I can also tell you if it’s a “site” condo.
And here are some highlights to remember about FHA loans:
- To get a FHA loan credit score does not have to be perfect
- FHA loan interest rates are at historic lows
- You can use gift funds for FHA loan down payment
- Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
- Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
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