Is your condo HUD Approved?
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Why condominium associations should become HUD/FHA condo approved –
For some people there’s been a stigma related with HUD and that is no longer the case – people buying in your price point are buying and need more mortgage options. Gone are the days of FHA Mortgage light documentation and no required down payment. A HUD condo loan now requires buyers to provide at least a 3.5% down payment.
An association that is not HUD Condo Approved will experience less traffic as buyers and realtors cannot independently or easily verify if something is wrong with the HOA (e.g. inadequate reserves, pending or on-going special assessments, litigation, high delinquency rates, etc.). More realtors and buyers visit approved properties as more mortgage options increase the likelihood of a completed or closed transaction.
The HUD condo approval in essence advertises and verifies to the market that the entire association has been reviewed and currently passes lending standards.
Why a HUD condo approval is needed?
Now entire condominium associations and in some cases townhome associations must be HUD condo approved for any unit to be eligible for an FHA Loan.
The HUD Condo Approval is a mortgage lending seal of approval for condominium associations.
Of note many realtors are skipping over properties that do not have this seal of approval as things might be swept under the rug like pending litigation, special assessments, inadequate insurance or reserves, etc.
General HUD approval rules of thumb:
- 10% of HOA fees must be reserved yearly;
- No more than 15% of the HOA fees can be more than 60 days late;
- No more than 50% of the HOA can be rented or investor owned;
- No one person can own more than 10% of the units;
- HOA’s with litigation can be approved on a case by case basis but need additional review; and
- No more than 25% of the HOA can be used for commercial purposes.
Is your condo VA Approved?
Search here for VA Approved Condos
Why condominium associations should become VA condo approved –
The VA condo approval allows VA Mortgages to be made available on condominiums.
An association that is not VA Condo Approved will experience less traffic as buyers and realtors cannot independently or easily verify if something is wrong with the HOA (e.g. inadequate reserves, pending or on-going special assessments, litigation, high delinquency rates, etc.). More realtors and buyers visit approved properties as more mortgage options increase the likelihood of a successful mortgage transaction.
The VA condo approval in essence advertises and verifies to the market that the entire association has been reviewed and currently passes governmental lending standards.
Why a VA condo approval is needed?
The VA Condo Approval is a mortgage lending seal of approval for condominium associations.
Total Capital Solutions Group 