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.
Print This Article
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
Placer County News HeadlinesPhotos: Napa Earthquake DamageWe recently had the opportunity to tour Napa following the magnitude 6.0 earthquake. The downtown area of Napa which contains many older buildings was hit especially hard.
California Senate Passes New Gun Violence BillCalifornia's state today passed the "Gun Violence Restraining Order (AB 1014)," legislation that would allow family members or law enforcement to petition a court
Laura's Law Implementation in Placer CountyPlacer County became the sixth county in California Tuesday to implement Laura's Law - a state statute that authorizes court-ordered assisted outpatient treatment of residents with severe
$22 Million Animal Services Center in Auburn Moves ForwardThe Placer County Board of Supervisors awarded a design-build contract on Tuesday that paves the way for construction of a long-planned Animal Services Center in North Auburn that
Autism in Girls Study Launched in CaliforniaAutism is far more common in boys than girls - affecting 1 in 54 boys and 1 in 252 girls - but little is known about biological differences between boys and girls with autism.
Sierra Shoot Out Water Polo Tournament in RocklinThe Sierra Shoot Out Water Polo tournament is back for another year at Sierra College. The junior college has hosted this high school tournament for over 20 years
What is Slowing the California Housing Recovery?Realtor, Julie Jalone of MagnumOne Realty in Roseville, writes about why the California and Sacramento housing markets are not expanding as fast as expected. Find out what Julie thinks is contributing to a slower real estate market.
Circus Vargas in Roseville this September Roseville,CA -- Get ready for the ultimate entertainment extravaganza for all ages as the circus comes to Roseville.
Hot Pink Fun Run in Downtown Roseville September 28thRegistration is now open for the 7th Annual Hot Pink Fun Run, a family-friendly run, walk and fun zone on Sunday, September 28, 2014.
Monty Python's Spamalot at Roseville TheaterSPAMALOT tells the legendary tale of King Arthur's quest to find the Holy Grail. However, diverting a bit from the true story, this hilarious musical
High Marks for Sierra College Energy Tech StudentsThe Sierra College Energy Technology students who took the North American Board of Certified Energy Practitioners Entry-level exam in June 2014, all passed.
Multiple Sclerosis Becomes Counselor's AssetDuring most of the '70s, Kathe Skinner, now a 65-year-old licensed marriage family therapist in Colorado Springs, Colorado, couldn't figure out what was wrong with her body.