FHA Loans: No to Condos
It was not many years ago when a client using an FHA loan to buy a home was rare. Over the past few years, the FHA has been the go-to mortgage option for low to moderate income buyers.
For young first time buyers and buyers who don't have significant cash for a down payment the FHA has been a great option. Among the three major federal lending intermediaries including Fannie Mae and Freddie Mac, the FHA is the most flexible on credit issues. It is also lenient on debt ratios and allows down payments as small as 3.5 percent.
The issue with Condos is not the buyer's ability to qualify for an FHA loan, it's that thousands of condo developments are ineligible for FHA lending and the number of prohibited projects is growing. As a result of federal policy changes and decisions by condo associations, thousands of complexes have become prohibited for the FHA.
Since the FHA tightened the rules for condo the number of developments approved for financing has dropped by more than half. The number of approved developments is now just over 10,000 while the total number of condo developments is approximately 144,000. There are very few approved condo complexes in the Sacramento area and is becoming a problem for owners as well as buyers.
The FHA will insure mortgages only on units in condo developments which have passed a certification process that examines budgets, reserves, insurance coverage, percentage of renters, and condo fee delinquencies. According to the FHA this certification process reduces taxpayer exposure to future losses by eliminating poorly managed and fiscally week developments. Condo associations complain the evaluation criteria are overly strict and the process of certification is too expensive.
Various state associations of Realtors are now working directly with condo boards and asking them to re-think their decisions not to pursue FHA certifications and to do this for their owners benefit. The program stresses keeping the condo values at their highest, increasing the pool of potential buyers and helping owner use their equity.
FHA certification may be complicated and cost associations money but could be well worth it for current residents and future buyers.
If you have any questions about buying or selling a condo or using FHA loans please feel free to contact me at the MagnumOne Realty office in Roseville (916-899-6571) or send an email to JulieJ@Jalone.com.
Julie Jalone, wife and mother living in Rocklin, is an experienced professional Realtor ® serving
the Greater Sacramento area including Placer, El Dorado, Yolo and Yuba counties.
Julie may be reached online at www.jalone.com or by calling (916) 276-6883
Check out her daily web blog: Keep it Real in Sacramento
Pet Care | Real Estate | Restaurants | Tech | View All | * Add/Upgrade Business
Placer County News HeadlinesSutter Roseville Addresses Patient Care During CNA PicketThe California Nurses Association (CNA) has informed Sutter Roseville Medical Center (SRMC) it will hold an informational picket in front of the medical center on Thursday, March 5
Placer SPCA Reduced Adoption FeesThroughout the month of March, all Lucky St. Catrick's cats have waived adoption fees and all St. Pitty's Day pit bulls have a reduced adoption fee
Lake Tahoe Ski Resorts Get Boost with SnowstormTahoe South launches into spring with more than a foot of fresh powder falling on area ski resorts: Heavenly, Sierra-at-Tahoe and Kirkwood this past weekend
Local Women Recognized at Soroptomist Awards CeremonySoroptimist International of Loomis Basin (SILB) recently presented nearly $5,000 in community awards
50 Days of the Dead: Mission in the RainThe Jerry Garcia Band ripping through a powerful Mission in the Rain from one of our favorite shows.
Roseville Crime Report Digest Update (3.3.15)The Roseville, CA weekly police crime report update for March 3, 2015.
Roseville Thieves Targeting Mail and Catalytic ConvertersRoseville police are reporting an increase in both mail and catalytic converter thefts.
Led Zeppelin in Roseville on March 30thRoseville area residents have the opportunity to see Led Zeppelin on the big screen March 30th at Century Roseville
Vertical Express for Can Do MS Squaw ValleyVertical Express for Can Do MS at Squaw Valley March 14- 15.
California Nut Festival Tickets on Sale March 6thTickets for the 2015 California Nut Festival held in Chico go on sale March 6th.
Ophir Gardens: Safe Water Flows AgainResidents of Ophir Gardens no longer have to worry about having a safe, reliable water supply.
Substitute Teacher Recruitment Fair in Roseville Roseville, CA - Brandman University is hosting a free Substitute Recruitment Fair in Roseville March 5th
NEWS: In Case You Missed It