How to Find FHA-approved Condos in 3 Easy Steps

You may already know that the Federal Housing Administration (FHA) can be helpful when buying a home, as about one-fifth of home purchases are made using FHA loans.

But can you use an FHA loan to buy a condo?  Yes, absolutely. However, not all condos will qualify. You have to find those that are part of projects which are FHA-approved.

Here’s how you can do so in three easy steps.

How to find FHA-approved condos in 3 steps

How do you know if a condo is FHA-approved?

  1. Visit the U.S. Department of Housing and Urban Development (HUD) website and navigate to the “Condominiums” page.

  2. Fill in at least one of the fields and click “Send.” You can search for a specific condo name or ID, or get a list of condos by state, county, zip code, etc. The less information you enter, the broader the results will be.FHA approved condos

  3. Review the results and click on individual listings to get more information. FHA approved condos

HUD offers additional support online and via email at sfadmin@hud.gov. Further, if you are working with a real estate agent, they should also be able to provide you with FHA-approved condo listings.

What are FHA-approved condos?

For starters, it’s important to understand more about the Federal Housing Administration (FHA) home loan program.

“The FHA Mortgage is commonly associated with first-time homebuyers. However, everyone can use it. The down payment requirement for this type of alternative mortgage starts as low as 3.5%, with the purchase of private mortgage insurance being a requirement,” says Rhett M. Struve of Keller Williams Premier Realty.

He adds, “FHA Mortgages are easier to qualify for, mostly because the credit score prerequisites are lenient.” The requirements are more lenient because the FHA insures the mortgage, helping to reduce the risk carried by the third-party lender.

The main pros and cons of FHA loans are as follows:

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • 5% down payment with a credit score as low as 580
  • 10% down payment with a credit score as low as 500
  • Lower interest rates
  • Higher debt-to-income ratios accepted
  • Assistance programs, gifts, and grants can cover the down payment costs
  • Seller can pay up to 6% of closing costs
  • Lenient credit score prerequisites
Cons
  • Mandatory private mortgage insurance
  • May enable the buying of too much house (more than someone could otherwise afford)

Now that you know what FHA loans are, FHA-approved condos are the single-unit condos that qualify for an FHA loan. When purchasing a condo using this program, you can reap the above benefits, but should also consider the drawbacks.

FHA or Conventional loan – which is right for you?

What are the FHA approval requirements?

For a condo project to qualify for FHA mortgage insurance, it must meet the following requirements:

  • In full compliance with state law requirements and in good standing
  • Primarily residential
  • Minimum of two dwelling units
  • Can be detached, semi-detached, high-rise (with or without an elevator), mid-rise, a walk-up, or manufactured
  • Must be covered by hazard and liability insurance

See the full list of detailed requirements here.

How long does it take to get FHA approval for a condo?

According to HUD, parties that are interested in applying to have their condo project qualify for FHA insurance must submit all the information required to the FHA Homeownership Center (HOC).

Processing time can take up to 30 days from the date HOC receives the package, but is subject to change based on the number of applications that are in processing and the HOC resources available at the time.

Who are FHA-approved lenders?

Where can you go to find the lenders that offer FHA loans?

HUD provides a page on its website where you can search for FHA lenders by name, location, insurance type, service-originator type, and more.

FHA approved condos

You will be provided with a list of lenders that match your criteria along with their contact information.

FHA approved condos

See our top-rated mortgage lenders including the #1 FHA lender in 2017

VA condo approved list

Along with the FHA loan, there is a government-backed mortgage program specifically for veterans that also allows for the purchase of condos.

VA loans offer even greater benefits than FHA, such as 0% down and no mortgage insurance required, but you must be a vet. Qualified borrowers can find eligible condos by visiting the web page (found here) and performing a search, or by simply asking a real estate agent.

“The Veterans Affairs Loan (VA Loan) was created in 1944 by the U.S. government as a way to make it more practical for military personnel to purchase a home. Unsurprisingly, you are required to be a veteran to obtain this type of financing,” says Struve.

He adds, “Perhaps the most significant benefit of a VA Loan is that it does not require a down payment. A 0% down payment, there has to be a catch, right? Well, sort of. Veterans who are utilizing this option for the first time are required to pay a ‘fee’ of 2.15% of the loan amount, and 3.3% for any real estate purchase after that.

However, private mortgage insurance is not required because the VA grantees the loan. If individuals using this type of financing are unable to make payments, the VA will work with the lender to alleviate the situation.”

FHA approved condos and downpayments

You may, however, want to consider making a down payment on your VA loan– here are three reasons why.

Find the right mortgage lender for you

Government programs have helped many people, who otherwise would not be able, to get into homes. If you are interested in buying a condo, can qualify for FHA, and have found an FHA loan to be the best plan of action, the above steps can help you easily find condos in your area of interest.

Mark Ferguson, real estate agent and investor, says, “I think FHA is great for those who do not have perfect credit and need to qualify for a more expensive home.

For those with lower debt-to-income levels and really good credit, conventional may be a better option. Conventional loans have as little as 3% down and, in some cases, removable mortgage insurance and no upfront mortgage insurance.”

VA loans vs. conventional mortgages – which should you choose?

Want to shop mortgage lenders? Discover detailed reviews and real-user ratings of top lenders all in one place.

By doing so, you can easily compare apples to apples to find the best fit for you. k

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