I have found a condo that i'm really interested in buying. After speaking with the agent I was told that financing was falling thru because of

Asked by Suz, California Mon Sep 14, 2009

"low occupancy" rate Can lenders do this? I have an already approved FHA loan and having a heck of time buying a place.

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Bob Georgiou, Agent, Danville, CA
Tue Sep 15, 2009
Absolutely they can. The lender should have been doing this long ago. Many owners when they move up (especially in this area) keep their first condo's investments and buy up with savings or good financing. This was very prevalent in the boom where 100% financing was rampant. Now that the market has "corrected" many entry level associations have been devastated or are at risk. IT's the at risk associations that the banks are worried about. By limiting FHA buyers to healthy associations, the government is putting pressure on those sellers with equity in thier starter home/investments to cash out and force owner occupancies up.

It is widely belived that high owner occupied associations are percieved to be nicer overall proeprties. In this area I don't necessarily agree but its the people in Washinton that make the rules.

Suz, stay the course and good luck!
Web Reference:  http://bob2sell.com
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Debra (Debbi…, Agent, Livingston, NJ
Tue Sep 15, 2009
Short answer Suz - Yes, they can do that, and they are doing that.

Patrick gave you a full explanaton of why they can do this.
There are also regulations by lenders limiting the number of units within a complex that can be rented at any given time.

It's not a surprise that financing requirements are more stringent these days......we got into this economic mess in part because lending policies had become too lenient. Now, they are trying to make up for that!

Good luck to you...
Debbie Rose
Prudential NJ Prooperties
0 votes
Patrick Thies, Agent, Anytown, IL
Mon Sep 14, 2009
There are many places around the country that are having the same problem. FHA especially is not approving loans for condos that have less than 50% occupancy, less than 50% sold or even condo buildings where a number of condo owners are behind in the monthly assessments. The reason is because the lenders feel that these buildings are high risk loans.

Check with your lender to see if the building is approved or not. One other note, FHA is stopping spot check approvals for buildings that are not FHA approved.
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