You Can Buy a Condo Unit With an FHA Mortgage
February 12, 2024
What do you need to know about how to buy a condo unit with an FHA mortgage? First, FHA loan rules specify that a condo unit must either be on or added to the FHA approval list.
There are exceptions for condos that did not go through FHA-required approval processes, which may be handled on a case-by-case basis. Be sure to ask the lender about this issue early in the loan process.
What You Get With an FHA Condo Loan
Condo loans are different because you are not purchasing the entire structure of the building your condo is in. Instead, you are buying a single unit in a shared occupancy structure.
You also purchase a part of a community that shares responsibility for the common areas of the condo project, the roof, foundation, and other aspects of the larger property.
Condo unit owners must obey condo association guidelines and bylaws. They may be subject to certain restrictions on what they can do to modify the exterior of their condo units, lawns, backyard where applicable, etc.
You should expect to pay a monthly fee for upkeep and maintenance of the shared spaces and be subject to additional payments when the roof needs maintenance or for any other costs specified in your condo owner’s association bylaws.
What to Know When Planning a Condo Loan
If you want to buy a condo, be advised that some sources (such as Bankrate) report some lenders charging more interest on condo loans than for other types of purchase loans.
With the FHA condo loan program, the interest rate requirement for the FHA is no different.
However, you will need to ask each lender you compare whether that financial institution charges a higher rate for condo loans than for suburban houses.
Compare Lenders and Ask an Agent
Make that part of your lender comparison question list for best results.
Don’t forget to ask about FHA condo approval lists, local down payment assistance options, and other important aspects of buying a condominium unit. Comparing lenders for any home loan option is key--don’t ask one or two loan officers. Widen your search to three to five at a minimum.
You should also consider the services of a real estate agent who is well-versed in condo transactions. Having someone in your corner who knows where to look for FHA-approved condo options could help you save a lot of time when you start hunting for the right property.
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RELATED VIDEOS:
Keep Your Eyes on Your Loan Balance
Learn About FHA Loan Prepayments
Taking Out a Home Loan Makes You a Borrower
There are exceptions for condos that did not go through FHA-required approval processes, which may be handled on a case-by-case basis. Be sure to ask the lender about this issue early in the loan process.
What You Get With an FHA Condo Loan
Condo loans are different because you are not purchasing the entire structure of the building your condo is in. Instead, you are buying a single unit in a shared occupancy structure.
You also purchase a part of a community that shares responsibility for the common areas of the condo project, the roof, foundation, and other aspects of the larger property.
Condo unit owners must obey condo association guidelines and bylaws. They may be subject to certain restrictions on what they can do to modify the exterior of their condo units, lawns, backyard where applicable, etc.
You should expect to pay a monthly fee for upkeep and maintenance of the shared spaces and be subject to additional payments when the roof needs maintenance or for any other costs specified in your condo owner’s association bylaws.
What to Know When Planning a Condo Loan
If you want to buy a condo, be advised that some sources (such as Bankrate) report some lenders charging more interest on condo loans than for other types of purchase loans.
With the FHA condo loan program, the interest rate requirement for the FHA is no different.
However, you will need to ask each lender you compare whether that financial institution charges a higher rate for condo loans than for suburban houses.
Compare Lenders and Ask an Agent
Make that part of your lender comparison question list for best results.
Don’t forget to ask about FHA condo approval lists, local down payment assistance options, and other important aspects of buying a condominium unit. Comparing lenders for any home loan option is key--don’t ask one or two loan officers. Widen your search to three to five at a minimum.
You should also consider the services of a real estate agent who is well-versed in condo transactions. Having someone in your corner who knows where to look for FHA-approved condo options could help you save a lot of time when you start hunting for the right property.
------------------------------
RELATED VIDEOS:
Keep Your Eyes on Your Loan Balance
Learn About FHA Loan Prepayments
Taking Out a Home Loan Makes You a Borrower
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