The Feds changed the game.
You now need to be HUD and FHA approved before your condominium community can offer FHA loans to your buyers. Once your complex is approved you must be recertified every 2 years.
If your condo community is not HUD/FHA approved you are missing out on a lot of buyers.
For people who can’t qualify for conventional loans the FHA loan program is the answer.
According to DQ News in April 2011 – 33.4% of the purchase mortgages used in 20 of the largest metro areas were FHA-Insured and the November 2010 Realtors Confidence Index reported that Nationally 39 percent of recent buyers purchased a home with FHA-insured loans.
If your condominium community is not FHA approved you are missing out on a lot of potential buyers. This will also affect current homeowners when they go to sell their unit.
For many first time home buyers qualifying for a conventional loan isnt possible. Through the FHA there are programs that make it feasible for these people to get affordable financing.
The Benefits of the FHA Loan Program
– A low down payment
The FHA program lets buyers put as little as 3.5% of the purchase price down. As you can imagine this opens many doors for people that wouldnt otherwise be able to come up with a conventional down payment.
– Help with closing costs
Qualified applicants can also receive up to 6% towards closing costs. This further reduces the loan and down payment amount.
– Co-Signer requirements
Another part of the program allows for a blood relative to co-sign. What makes this program different is that if the home-buyers dont have enough credit to qualify on their own a blood relative can co-sign without needing to reside in the home that is being purchased.
With the help of those benefits people with little credit, low and moderate incomes and first time home buyers have more opportunities to find affordable housing.
These types of people make up a large part of those buying homes. First time home buyers are usually those that are less qualified for conventional loans. Without being HUD approved your condo community will not be able to provide affordable financing from the FHA.
Recently HUD made drastic changes to their condo approval program. These changes jeopardize the availability of FHA loans for condominiums.
– Elimination of spot approvals
– Mandatory recertification for projects approved prior to October 2009
– Re-certification every 2 years
The elimination of spot approval can cause major concern and problems for your condominium community. Spot approvals gave every condo community a way to assist people requiring FHA programs. Loans were decided on an as needed basis.
If you were relying on spot approvals to obtain financing for those homebuyers that need FHA assistance that option is no longer available. You will not be able to get FHA help to purchase a home within your community.
Now full HUD approval is required for anyone wanting to use the FHA loan program.
If your condominiums need to be certified or recertified now is the time to do it. It is anticipated that there will be a boatload of applications to HUD for FHA approval over the next few months so get yours in now. First come – first served.
To see if your condominium complex is HUD/FHA approved go to https://entp.hud.gov/idapp/html/condlook.cfm
To view HUD Mortgagee Letter 2009-46 B regarding condos approval go here http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf
For a Condominium Project Approval and Processing Guide go here http://portal.hud.gov/hudportal/documents/huddoc?id=11-22mlguide.pdf