Home Buying in 48093>Question Details

Leslie Roe, Home Buyer in Warren, MI

I was told that you cannot buy a condo, unless it is approved by the FHA. I am looking at some that are not

Asked by Leslie Roe, Warren, MI Fri Apr 4, 2008

on the approved list but the realtor told me that the last 4 condos that sold where I am looking, have been FHA loans.

Can it be approved, just not on the list?

Help the community by answering this question:


Hi Leslie,

I just had a buyer client close on a condo in Warren. She was using a FHA mortgage, and no,
the condo wasn't on the approved list. Her mortgage lender was able to obtain a "spot approval"
for the condo.

It was quite a simple process: The lender provided a form for the condo management company
to fill out. On it were approximately 12 questions. It took all of 48 hours for the management
company to complete and another 24 hours for the spot approval from the underwriter.

Do not let it deter you. It is quite possible that the 4 units you are talking about were issued
"spot approvals" also and the complex is simply not in HUD's approved list.

Good luck to you and enjoy your new home!

Kris Wales
RE/MAX Advantage 1, Inc.
0 votes Thank Flag Link Wed Jun 18, 2008
The FHA website has the list posted within the site for specific cities. There is an application where the HOA can meet criteria and be able to proceed with that loan as long as the criteria is met and the application is met.
0 votes Thank Flag Link Tue Jun 17, 2008
The previous respondents were correct in saying this would only be an issue if you had to do an FHA loan, as opposed to a conforming loan. Just because it is not on the list, however, does not mean you could not obtain an FHA loan on that property. FHA has a process called "spot approval" by which an exception can be made provided the condo development meets some basic guidelines for FHA financing. As Michelle referred to, there is a questionnaire that the condo association needs to fill out to determine eligibility. Some things they look at are the level of completion if it is a new development (must be 75% complete), the concentration of investors vs. owner occupied, and also the concentration of current FHA loans in that development (they place a limit on how many are allowed). Another big thing is that the association must have been turned over to the homeowners.

Spot approval is not too tough if it's an existing development, but is pretty difficult on new construction

Hope this helps...
0 votes Thank Flag Link Fri Apr 18, 2008
if you would like to get a condo FHA approved or need help with financing please give me a call.

0 votes Thank Flag Link Fri Apr 18, 2008
Thank you guys so much for so much help! As always, you answered my question brilliantly!
0 votes Thank Flag Link Fri Apr 4, 2008
Leslie, This question and answer were available on the HUD website about FHA and condos. There is a list of approved condos on the website. You or your agent could also contact the Detroit office to see if your condo is on the pending list.

Web Reference: http://www.mi-living.com
0 votes Thank Flag Link Fri Apr 4, 2008
this is not always true, but if the condominium (building/project) is approved by VA, FNMA (conventional), or FHA, what ever your loan choice, it is better pricing on the loan including a better interest rate. if the building or project is not approved you, YES, you can get financing. Ask your LOCAL realtor for help on this and if they do not know; try another agent that understands condominiums. they will know a lender to send you to. p.s. I'm not on your area therefore not the the best choice of an agent for you. best of luck!
0 votes Thank Flag Link Fri Apr 4, 2008
Your Realtor is correct the project must be FHA approved. In saying that however, you can have you lender approve you if the condo is approved in phases. This has worked with some of my clients. It also be turned over the the homeowners association. It is not the loan itself but the condo community that must meet the requirements.
0 votes Thank Flag Link Fri Apr 4, 2008
I have never heard this as I just sold a condo with a FHA loan and the subject never came up. Doesn’t mean it’s not true, but in my situation it was never an issue. We did FHA with the AmeriDrean DPA. I know the lender requested a questionnaire sheet to be filled out, and they asked questions like how much in complex was insured for, how much they had in the bank for repairs and how they took care of repairs..Etc, so I guess depending on how the questions are answered, will determine if the loan will go through.
0 votes Thank Flag Link Fri Apr 4, 2008
Marilyn is correct. The only thing that will affect is an FHA based loan product. Now many lenders have alot of FHA products they use. So it is different to actually get a Non FHA lender product sometimes. I have seen a few strange incidences when it comes to FHA approval. What you are usually looking for is the underwriters approval for the bank and their interpretation of the FHA guidelines. We had a similar situation where one lender was approving counting contracts and sold units to achieve the FHA guidelines and another lender was not counting contracts but only units that had been closed on. It is best to discuss with your lender and they can tell you what their underwriter will say.

Larry Story
Coldwell Banker Triad
0 votes Thank Flag Link Fri Apr 4, 2008
My understanding that if a complex it is not on the approved list (must meet guidelines for percentage of owner occupants) that FHA will not make a loan on a unit within the complex.
Web Reference: http://bestsellerstl.com
0 votes Thank Flag Link Fri Apr 4, 2008
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