Source: Ris Media —
If you want to buy a home but the down payment requirements make this seem out of reach, there are more affordable options. Choosing an FHA-approved condo allows you an easier option to buy with lower credit and down payment requirements.
Changes to FHA condo approval rules now mean individual units can qualify even if the condominium development isn’t approved.
But if you want to buy a condo using an FHA loan, is there anything you can do if it isn’t on the condo approval list? We look at how to check if the condo is on the FHA-approved list and what you can do if it isn’t.
What is an FHA Approved Condo?
A condo or condominium is a unit in a larger development and is privately owned. Owners of these homes will own their individual units and have an interest in the development’s common areas.
A condominium association will manage and maintain the common areas, and owners will need to pay association fees for the upkeep of these areas.
Using an FHA loan to buy a condo means you don’t have to save for a large down payment, with 3.5% being the minimum.
FHA loans are also more flexible about credit scores, and you should benefit from fairly low-interest rates.
An FHA-approved condo has approval from HUD. Often the entire condo complex or just groups of condos are approved. If the complex is not approved, individual units can be.
For a condominium complex to be approved by HUD, it needs to meet certain requirements:
- The development needs to be in good condition
- There has to be sufficient insurance coverage
- The finances need to be well managed
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