Buyers can purchase a condo with an FHA loan if it is on the HUD list of approved condominium projects.
Until a few days ago, if a condo development was not on the HUD-approved list, the buyer's lender could complete a form documenting information about the development's occupancy, ownership, and financial history. If the completed form verified that the condo project met the FHA standards for funding, the condo development could be granted "spot approval" for an FHA loan.
The spot approval process is now a thing of the past, meaning it has suddenly become more difficult for many condo buyers to obtain a low down payment loan. We have one client with an FHA loan who is expecting to close on her condo next week. Now we're working with her to put another financing plan in place.
If you've been planning to purchase your condo with an FHA loan, check with your lender to see if the spot approval change will affect your transaction.
For more information, you'll find these links useful:
- Blog post, from Rob Seibert of Flabox
- HUD mortgagee letter 2009-19 (select the top document in the list)
No comments:
Post a Comment