FHA Approved Condos And HUD Condo Guidelines

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This ARTICLE On FHA Approved Condos And HUD Condo Guidelines Was PUBLISHED On November 29th, 2019

FHA Approved Condos
Gustan Cho Associates

Condominiums are becoming more popular for first-time homebuyers, seniors, millennials, and those who are hardly at home.

  • FHA loans are the most popular home mortgage program in the United States
  • However, until recently, condo buyers could only purchase FHA Approved Condos
  • HUD re-launched FHA Spot Loans where condo buyers can purchase condos in non-FHA Approved Condos
  • Not all condominium complex is FHA Approved Condos
  • This does not mean that the condominium complex does not meet HUD Building Guidelines
  • FHA Approved Condos need to get certified by HUD by getting an annual inspection and the HOA completing the necessary paperwork and paying fees
  • This is often time-consuming and expensive
  • Therefore, more condo complex is not getting their HUD certification

In this article, we will cover and discuss FHA Approved Condos And HUD Condo Guidelines.

How To Determine FHA Approved Condos

How To Determine FHA Approved Condos

Until recently, condo buyers could only purchase FHA Approved Condos. FHA Spot Loans are back. FHA Spot Loans enables condominium buyers to purchase a condo unit in a non-HUD Approved Condo Complex. Condo buyers can find FHA Approved Condos through HUD’s Approved Condo List. However, condo buyers can now purchase a condominium unit with an FHA loan in a complex that is non-HUD Approved. Condos are becoming very popular for first-time homebuyers and elderly homebuyers who need to downsize. Condos are popular for homebuyers who do not want to maintain their home and have the HOA do the maintenance.

How To Navigate HUD’s Condominium Search Tool

How To Navigate HUD's Condominium Search Tool

HUD’s condominium search tool is a useful resource to check if a particular condo complex is HUD Approved. It lists a national database by zip code and area to see if a particular complex is FHA Approved.

Here are the basic steps in researching whether or not a particular condo complex is FHA Approved:

  • Log in to the condo search tool website powered by HUD
  • Follow the instructions
  • The first step will be entering the zip code of the condo complex
  • This tool enables condo buyers to search for any condo in the nation to see whether or not the complex is HUD Approved
  • If the search shows EXPIRED, this means the complex is no longer HUD Approved because the HOA did not renew its HUD Certification
  • HOA’s need to renew their HUD Certifications every three years

If you are having issues with navigating the site, contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.

HUD-Approved Versus Not Approved

HUD-Approved Versus Not Approved

Many apartment complexes do not like red tape.

  • Due to the high demand for condo buyers with conventional loans, many Condo Complexes may not care whether or not they are FHA Approved
  • A large percentage of condominium complexes are not HUD-approved
  • This is due to the fact that until October 2019, FHA loans were available only for condominiums located in HUD-approved condo developments
  • Only 6.5% of the condo complex developments are HUD-Approved Condos
  • There are a total of 150,000 condo developments in the United States
  • Only 9,750 complexes were HUD-Approved Condo Developments
  • Just because a complex is not FHA eligible does not mean they are not in habitable condition

It just means the HOA did not find it necessary to welcome FHA homebuyers.

FHA Spot Loan Mortgage Guidelines

What are FHA Spot Loan Mortgage Guidelines

Great news for condominium unit homebuyers.

  • For condo buyers who can only qualify for FHA loans, they can now get FHA Spot Loan approvals within a condo complex that is not HUD-approved
  • This new guideline can increase condo purchases from 20,000 to 60,000 units annually

The bottom line is a condominium unit that is not part of an FHA approved development can still be eligible for an FHA mortgage.

Steps In Qualifying For Condominium Home Loans

What are Steps In Qualifying For Condominium Home Loans

Getting qualified for an FHA loan is no different for a condo versus a single-family home. However, lenders consider condominiums riskier investments. With condos, lenders need to underwrite the condo complex as well. Even though the condo complex development is approved, buyers will still need a home appraisal. If the complex is not approved, condo buyers can still be eligible to purchase the unit with an FHA Spot Loan. Before entering into a real estate purchase contract, please consult with your loan officer. The loan officer will talk to the HOA manager to make sure that the condo development meets all HUD guidelines. This holds true even though it will be an FHA Spot Loan.

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