So how does an FHA Loan Work? There is so much bad information out there. There have been increasing and drastic changes to the FHA program and how it works over the last couple years. I constantly field the same recurring questions so I wanted to provide a quick information piece below to answer the most common questions and misconceptions I hear.
Does a condominium or building have to be approved to use an FHA loan? Yes, it must be full approved by the HUD (Department of Housing and Urban Development. It is very simple to check FHA approval status. Simply log onto the HUD website at https://entp.hud.gov/idapp/html/condlook.cfm and search. If your target condo or building is on list and is “approved”, you are good to go. If it is not listed, it says rejected, it says withdrawn, then it is not FHA approved. There is “secret” source for FHA approval. It’s listed here or it is not FHA approved.
Can I get an FHA spot approval? No. These no longer exist as of 2 years ago.
Do FHA approvals expire? Yes. They used to last forever but that didn’t work out so well (just check out the FHA housing market stats from 2006 to 2007). As of two years ago, all FHA approvals were scrapped and all parties interested in being FHA approved again had to re-apply for approval. Now, FHA approvals only last 2 years.
Does it matter if my condominium, town home, or building is not FHA approved? Yes. Lets put it this way: Simple economics says if the demand increases, so does the price. Do you think having the ability to sell your property to a larger pool or buyers will increase or decrease demand for you condo or town home.
Does a house have to be FHA approved? No . Although any significant issues or problems with the home such as a compromised roof, foundation issues, missing floor treatments, or other major conditions will derail an FHA loan. FHA financing is possible but you
would most likely need to explore FHA rehab loan options. More information on those later or contact me to find out exactly how they work.
Does HUD or FHA provide a loan to me ? No, the Federal Housing Administration is simply insuring private loans issued for new and existing housing, and for approved programs for home repairs.
Do you need good credit for an FHA loan? The idea behind FHA loans is to provide an opportunity for would be homeowners to buy a home or condo that they otherwise would be unable to under current lending standards and rules. Therefore, credit standards are far more forgiving, interest rates can be lower than conventional interest rates, and down payment requirements are as low as 3.5 % in most cases. This makes FHA financing very attractive to many whom could otherwise not over-climb the barriers to entry in to becoming a home owner.
Downtown San Diego FHA Approved Condos and Buildings
Can I buy a second home or investment property with FHA financing? FHA financing is a way to allow home buyers the opportunity to own and live in a home as a primary residence they may not otherwise be able to afford. Do you think the Federal government will look kindly upon using the FHA program to increase an investment portfolio or finance a second home for a home owner whom already owns a primary residence? Most likely no.
Are FHA loans assumable? Yes. This can be very attractive to any FHA buyer in the future. Especially if interest rates have risen significantly.
Are FHA loans just for first time home buyers? No. FHA loans can be a great way for move up buyers to find the extra money to “move up” to a bigger home to accommodate additional family members moving in, family members being born, better neighborhoods, or any other reason the need should arise for extra space or enhanced location.
Can I have a c0-signer or co-borrower on my FHA loan? Yes
There as so many misconceptions out there regarding FHA loans and lending. Interested in viewing your FHA purchase options in San Diego? Search all San Diego Real Estate
Questions? Comments? Sen them my way anytime!
