HUD UPDATED Condo Guidelines On Non-HUD Approved Complex

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This ARTICLE On HUD UPDATED Condo Guidelines On Non-HUD Approved Complex Was PUBLISHED On October 26th, 2019

HUD UPDATED Condo Guidelines
Gustan Cho Associates

HUD UPDATED Condo Guidelines On Non-HUD Approved Complex on FHA Loans:

  • Gustan Cho Associates have some exciting information surrounding FHA mortgages specifically used to purchase a condo
  • Over the years The U.S. Department of Housing and Urban Development (HUD) has looked at condos in many different ways
  • These changes come as BEN CARSON is Secretary of the Department
  • In this blog, we will detail the new guideline, the process for utilizing the new rule to buy a condo, and instructions to apply for purchasing a condo with an FHA mortgage with Gustan Cho Associates

In this article, we will cover and discuss HUD UPDATED Condo Guidelines On Non-HUD Approved Complex.

New HUD UPDATED Condo Guidelines On Non-HUD Approved Complex: FHA Spot Loans

The U.S. Department of Housing and Urban Development has made it somewhat tricky for borrowers to utilize an FHA loan to purchase a condo.

  • Due to the fact that the condo must be approved through HUD
  • There are thousands of condo complexes around the nation that do not want to certify themselves with HUD, for whatever reason

HUD holds these condo complexes to a structural standard for allowing FHA-insured loans to be used to purchase the condominiums.

Other Eligibility Requirements On Condominium Complexes By HUD

What are Other Eligibility Requirements On Condominium Complexes By HUD

Other HUD UPDATED Condo Guidelines On Non-HUD Approved Complex consist of FHA insurance concentration, owner-occupancy percentage, and the financial condition of the complex overall. All of these fail-safes are put in place to protect borrowers from buying in a risky condo complex. For a list of FHA approved condos near you, please see the HUD APPROVED CONDO LIST.

Purchasing Condos With FHA Loans That Is Not On HUD-Approved List

What do you do if the complex you want to buy a home in is not on the list?

  • The U.S. Department of Housing and Urban Development approved the new guideline under Federal Register (Docket No. FR-5715 -F-02) expanding condominium approvals
  • This new guideline is active for all FHA case numbers assigned AFTER October 15th, 2019
  • The Federal Housing Administration is now accepting single-unit approvals (SUAs) for condos!
  • That’s right, even if the condominium complex is not approved with the FHA, you may go through a process to have your single unit approved
  • The loan will now be insurable through FHA, and FHA financing is allowed

This is a promising opportunity. A way to open up new buying opportunities not only for potential borrowers but also for sellers trying to sell their condos.

Qualifying For FHA Spot Loans

How Qualifying For FHA Spot Loans

FHA Spot Loans are back. Below are a few requirements to utilize a single unit approval:

  • LTV <90% OR the AUS has an “ ACCEPT” on FHA TOTAL SCORECARD
  • 50% of the units must be owner-occupied units
  • Condominium project must have at least five units
  • Single unit approvals may not exceed 10% of the total in the complex
  • If less than 10 units in the complex, the maximum single-unit approvals will be capped at two units
  • The project needs a certificate of occupancy issued at least 12 months prior or has been occupied for that duration
  • No manufactured housing allowed

HUD UPDATED Condo Guidelines will now allow condo buyers in non-approved condo complexes to purchase condos with FHA Loans.

Getting Approval By HUD On FHA Spot Loans

The Single Unit Approval will be requested by your lender directly through FHA.

  • Your realtor will need to provide the information for the association to complete a condo questionnaire
  • From there the FHA Resource Center will process your case number request
  • They may need more information than provided on the condo questionnaire, so be prepared for a delay
  • In most cases, the condo association will require you pay for a condo questionnaire in advance

This fee is non-refundable, even if the FHA does not approve the single unit condo.  

The Main Reason For HUD UPDATED Condo Guidelines

What is The Main Reason For HUD UPDATED Condo Guidelines

What caused this new change in condo approvals?

According to hud.gov, the data shows that 84% of FHA-insured condo buyers are first time home buyers.

  • There are more than a 150,000 condo complex in the United States
  • Unfortunately, only 6.5% participate are FHA approved
  • As a result of this new guideline, it is estimated that 20,000 to 60,000 more condominiums will be financed with FHA mortgages

Ben Carson states “condos have become a great source of affordable and substantive homeownership.”

Benefits Of Condos Versus Single-Family Homes

This new guideline hopes to open the door for homeownership in young Americans as well as senior citizens who are downsizing. 

  • Not only does this FHA update introduced the new single-unit approval process they have also made it easier for condo complex in this state-approved

They have expanded the recertification requirement for FHA approved condominium complexes from two years to three years.

Mixed-Use Properties

What are Mixed-Use Properties

They have also allowed more mixed-use projects to be eligible for FHA insurance.

  • Mixed-use properties are popular in large urban cities
  • Where the bottom floor maybe retail space and there are Condominiums units above in a high-rise building
  • These Road changes are a win for everybody
  • Expanding homeownership to thousands of Americans
  • A growing trend of millennials enjoys living in large cities where condos are very common

This is just another way legislation is trying to allow more Millennials and Generation Z to achieve homeownership.

Qualifying With A Lender With No Overlays And Knowledgable On HUD UPDATED Condo Guidelines

Many less experienced loan officers may not know that HUD has a DIFFERENT approved condo list than FHA, even though both agencies are overseen by HUD.  It is important to utilize a highly-skilled loan officer who is up to date on mortgage guidelines. If you do not, you may cause yourself money over the long run. Gustan Cho Associates are mortgage professionals who offer FHA mortgages without LENDER OVERLAYS. For more information on the updated condo guidelines, please contact Mike Gracz on 630-659-7644 or send an email to mgracz@gustancho.com.

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