The main advantage of buying a condo as a home is getting to enjoy as many outdoor projects as one wishes, without having to spend time maintaining the yard. Still with amenities such as malls, hospitals, employment and commutes often found within a walking distance, many people are opting for condos every year.
However when it comes to buying a condo be it for first time buyers or repeat buyers, getting affordable condo housing with VA, FHA or conventional loan one has to meet the agency’s requirements beforehand. With up to 90% mortgages on condos being financed by agencies, most families can get financing through one.
Buying a Condo within “Limited Review” Standards
When it comes to buying a condo using loans form either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) which is government financed, the condo has to meet the limited review standards. Limited reviews standards are reviews that are in a questionnaire form send from the lender one is using, to the condos homeowners association.
This usually aids since Freddie Mac, and Fannie Mae do not have a list of pre-approved condominium projects, making it hard for one to get a loan if their desirable condos are not approved. With the form is completed, the condos homeowners association will then sent it back to the lender, informing them if the condo in question meets set requirements to get a loan approval.
To be eligible for a limited review for first time home owners, one must be able to pre-pay 10% of and up to 25% for second home owners. Some additional requirements are needed when buying a condo with an FHA, VA or conventional loan in the limited review standards are:
Units have to be at least 400sq feet
The properties should not have any pending lawsuits regarding habitability and safety
Half of the units have to be owner occupied and not rented out
Less than 15% of units should be in arrears in payments
10% of homeowners association payments should be allocated to reserves
Commercial space in the building should be less that 25%
Condos in question should not be advertised for renting at time of loan application
Additional requirements such as no single person should not own more than 10% of the units, can also affect buying a condo with an FHA, VA or conventional loan eligibility.
Buying A Condo outside “Limited Review” Standards
When choosing a condo and one finds out that the eligibility for a conventional loan is outside the limited review standards, then a full review will be needed from the homeowner’s association. Stricter in nature, the reviews usually take longer.
Any prospective homeowner should be able to find out if the lender in question is willing to do a complete full review, within a stipulated time agreed by the seller to hold the unit. With the full complete review, the condo project can be able to qualify for other types of financing such as FHA, as opposed to Freddie Mac and Fannie Mae where convention loans fall under.
FHA Condo Search
With the limited review out of the question, prospective homeowners will be glad to know that FHA does maintain a list of pre-approved condos on their website. The condos are usually numerous in number, spanning most towns and cities across the country. With the homeowners association realizing that most condos do not meet the limited review criteria, the process of approval of condos is easier making more owners be able to sell and buy.
The downside is that even with more residents in the buildings paying the homeowners association dues leading to fewer foreclosures, the need to have the condos re-approved every two years makes the FHA requirements hard to meet. However with many complexes realizing the limitations, the likelihood of getting a condo being advertised as FHA approved is high in efforts of getting more units sold.
Veterans Affairs Approved Condos
Prospective homeowners looking for affordable housing with a military background can get VA homes. With the Veterans Administration (VA) known to maintain a list of pre-approved condo projects in their database, online searches are easier. However, it is good to note that the process of buying a condo with an FHA, VA or conventional loan, VA is no doubt the most stressful. Taking up to 90 days just to get approval and an approval fee with extensive paperwork as a guideline, buyers seeking to use VA financing are often advised to buy already approved condominium projects to avoid disappointments.