Home Buying in Rogers Park>Question Details

Dknapp, Home Buyer in Rogers Park, Chicago,...

when buying a condo, is it important that the condo be FHA approved?

Asked by Dknapp, Rogers Park, Chicago, IL Mon Dec 20, 2010

Loans can be obtained from one bank only that is involved with the condo renovations. They are offering second soft loans. Why is it imporant to have FHA approval? They say they will not qualify for FHA until they have 70% occupancy. Presently, 20 units are rented out low income people that our subsidized but the government.

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Aimee Renkes’ answer
First, in general FHA approval for a condo indicates that the building association is financially sound and meets regaulatory requirements. FHA approval means that all potential buyers can purchase a unit using FHA or conforming loan programs. It is good to have a condo building with FHA approval because that can attract all buyers, so the higher demand for the property will support home values and resale. It doesn't mean a conod project is bad or not compliant if it doesn't have FHA approval...not all condo association seek this approval and that's ok.

FHA has guidelines regarding how many units must be sold and closed before and FHA loan can be used to buy a unit. So that is why the developer is making that a big deal. However, FHA changed guidelines so the property should be eligible for FHA financing prior to the 70% occupancy that they indicated. So if you want to use an FHA loan to buy in this project you should be working with a lender who udnerstands all of these rules and can make sure you are positioned to buy.

Also, other banks may be agreeable to providing financing in the project even if the developer says that only one bank can do it right now.

Hope this helps, but feel free to email or call me to discuss further.
0 votes Thank Flag Link Tue Dec 21, 2010
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