FHA Loans for Condominium Units

FHA Condominium Loans are specifically for those who purchase housing units in a condominium building, in which separate owners of individual units jointly own the development's common areas and facilities, has become a very popular alternative to home ownership. Insurance for this type of housing is provided through FHA Section 234(c). This FHA insurance is very important for low and moderate-income renters who now can avoid the risk of being displaced when their apartments are converted into condominiums.

HOW IT WORKS
FHA Condominium Loans are designed to encourage lenders to extend affordable mortgage credit to those who have non-conventional forms of ownership. The Section 234(c) program insures a loan for 15, 20 or 30 years to purchase a unit in a condominium building, which must contain at least four dwelling units and can be comprised of detached and semidetached units, row houses, walkups, or an elevator structure.

Many of the features of Section 234(c) mortgage insurance are similar to those of FHA Section 203(b) for one to four-family homes. Down payment requirements are low because these FHA loans allow borrowers to finance up to 97 percent of their home loan and some of the closing costs can also be financed, further reducing up front costs. Section 234(c) loan, FHA sets limits on the size of the loan which vary with location and the number of units being purchased.

RESTRICTIONS - Approved Condominiums
If the apartment is in a building that was converted from rental housing, insurance may not be provided under Section 234(c) unless:

this conversion occurred more than one year prior to the application for insurance.
the potential buyer or co-buyer was a tenant of that rental housing.
the conversion of the property is sponsored by a tenant's organization that represents a majority of the households in the project.

51% of FHA mortgages in the project must be owner-occupied with a minimum requirement of 4 condominium units in the completed project

FHA ALLOWS 20% OF THE UNITS TO HAVE FHA INSURED LOANS WHEN THERE ARE 30 OR LESS UNITS, OVER 30 UNITS ONLY 10% MAY BE FHA INSURED LOANS

The Condominium Association must be in control of the units for a minimum of 12 months or the Units must be FHA Approved prior to the formation of the Association in order for Unit owners to finance using a FHA Insured Program.

ELIGIBILITY
Any creditworthy persons who meet FHA underwriting criteria and are intending to occupy the condominium unit as their principal residence are eligible to apply.

How do I find out if a CONDO is HUD approved?

Condos Condominium Questionaires and FHA Spot Request

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