FHA approved financing for condos is hard to come by.
FHA has strict requirements for approving a condo for financing.
This is unfortunate, because the current credit crunch is making
it more difficult to obtain condo financing. Most conventional programs
are looking for a 10% down payment. FHA only requires a 3 1/2 % down
payment. Also, conventional programs require a much higher credit score
than does the FHA program.
Here is a list of some of the FHA requirements for condo financing:
1) The legal documents of the homeowners association do not contain a
right of first refusal or restrictive covenant. (This one kills most deals,
because the “right of first refusal” is very common in Chicago condo declarations)
2) There are no special assessments pending.
3) No single entity owns more than 10 percent of the total units in the project.
4) The common areas have been under the control of the homeowners association
for at least one year.
5) At least 51 percent of the total units in the project are owner-occupied.
6) There are no adverse environmental factors affecting the project as a whole or
individual units.
7) At least 90 percent of the total units in the project have been sold.
8 The units in the project are owned in fee simple or the units are held under a
leasehold acceptable to FHA.
9) The owners association has adequate common area insurance coverage.
10) General maintenance level of common elements is acceptable and there is no
deferred maintenance, based on the comments by the Appraiser and/or the pictures.
11) The owners association has a reserve plan and a reserve fund, separate from the
operating account that is adequate to prevent deferred maintenance.
12) No legal action is pending against the condominium association, or its officers or
directors.
13) For projects consisting of 30 units or less, no more than 20 percent of the total
units are encumbered by FHA insured mortgages.
As you can see, this list is quite extensive. If you need FHA financing, you may
want to search for Single Family Homes or 2-4 Unit Buildings. I wish FHA financing
was easier to obtain for condo purchases. However, there are a handful of condos
that have FHA approval!
If you would like a list of FHA approved Chicago condos,
please send me an e-mail. You can also visit me online at www.773property.com
I am a licensed REALTOR that specializes in Chicago Real Estate.
Although I service all areas of Chicago, I work mostly on the South side.
My office is near the Bronzeville and Hyde Park neighborhoods.
My services include, but are not limited to, the following:
* Helping Owners Avoid Foreclosure
* Helping First Time Home buyers realize their dream
* Helping Sellers find qualified buyers
* Helping tenants lease luxury condo rentals
Until the next time,
Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!
Visit me online: www.773property.com
EQUAL HOUSING OPPORTUNITY
