FHA financing SHOULD be KING - If agents are ready

October 14th, 2008

Posted by Jim Reppond

FHA logoTalk to any mortgage broker around Seattle right now and they will tell you they are doing way more FHA loans than they did before. Many mortgage people are doing exclusively FHA. Why? Because of low-down payments, less restrictive credit requirements, and increased loan limits that finally work in our market.

Now if only agents realized that Buyers are actively looking for FHA approved properties. Many condos are not approved for FHA and that can kill the option. Spot checking can work for up to about 10% of units in a non-approved condo project, but requirements might make that impossible as well.

FHA loans - imageI think it’s amazing how many agents do not know if their condo listings are FHA approved or not. We used to just enter “cash out” or “conventional” for financing options in the listing and not worry about it. No one was doing FHA loans so we didn’t need to bother. But times have changed and now it matters. ANYTHING you can do to promote and market your listings that might create a sale MATTERS.

Just for fun I just did a search of the Northwest Multiple listing Service area 390 condos actively for sale under $567,500 (the current FHA loan limit) and came up with 275. Only 75 listed FHA financing as an option. So I did some random searches of buildings that I know are FHA approved. Within a couple of minutes I came up with a half a dozen that were approved, but not listed in the NWMLS with FHA as a financing option. What a missed opportunity for those Sellers!

To find out if your condo is approved, go to the HUD website below, enter the city, and then enter the condo name. If it doesn’t come up, it’s not been approved. Many condos have not bothered with this process because it is costly and has a lot of bureaucratic red tape involved.

FHA-Approved Condominium HUD website

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3 Comments Add your own

  • 1. FHA Primer | Th&hellip  |  October 15th, 2008 at 10:52 am

    […] Here’s a few recent FHA resources from the ‘net: - Let FHA Loans Help You, the official HUD/FHA website - A Solution for FHA Buyers Searching for a Down Payment, The Mortgage Porter - FHA is waiting to give you a loan, The Seattle PI - FHA financing SHOULD be KING - If agents are ready, The Seattle Specialist […]

  • 2. Tony Sena  |  October 29th, 2008 at 6:53 pm

    Almost every transaction in Vegas that is not a cash deal is a FHA transaction. We will see FHA deals around for a very long time.

    When I first got into the business in 2001, no one did a FHA deal and now its all about FHA.

  • 3. Ditech Home Loans  |  December 12th, 2008 at 10:54 am

    FHA also has a spot loan provision for non-approved condos.

    Here are some guidelines:

    • The homeowners association cannot have a right of first refusal restriction on sales.
    • Condominiums must provide undivided ownership of common areas by unit owners.
    • The condominium project cannot be subject to additional phasing or annexation.
    • No special assessments or legal action can be pending against the association.
    • Common areas must be under the condo association’s control for at least one year.
    • At least 90 percent of the total units in the condo project have to be sold.
    • At least 51 percent of the total units in the project must be owner-occupied.
    • No adverse environmental factors affecting the project or units are allowed.
    • No single entity can own more than 10 percent of the total units in the condo project.
    • The units must be owned in fee simple or held under a lease hold acceptable to FHA.
    • For projects over 30 units, no more than 10 percent of the units can have FHA loans, and for projects of 30 units or less, no more than 20 percent of the units can have FHA loans.

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