Shopping for A Condominium With An FHA Mortgage
Are you interested in buying a condo with an FHA home loan? It’s an option some borrowers don’t know they have – some make assumptions about the FHA home loan program and condo loan availability.
The fact is, however, that an FHA mortgage can be used to purchase a condominium just like any suburban home, although there are a few considerations to keep in mind with this type of purchase.
FHA condominium loans have the same basic qualifying terms as other FHA mortgages for RVs, suburban homes, etc.
This type of FHA mortgage, like all other FHA mortgages, is open to first-time buyers AND those who have previously owned a home (including for the past three years).
You will be approved for the FHA home loan based on your financial qualifications and not on whether or not you have owned property in the past. based home loan programs could.
The down payment requirements for FHA home loans – 3.5% is the lowest possible down payment – don’t change depending on the type of property you’re buying.
This means that just because you want to buy a condo instead of an RV or house in a typical neighborhood, you won’t pay a larger down payment.
An FHA home loan will not be approved for a mortgage that has pre-emption clauses in the condo owner’s association bylaws or agreements.
You cannot be prevented from freely transferring your FHA condo loan to someone else. You cannot be prevented from freely selling your condo to someone else. These rules are built into the FHA home loan program.
Likewise, you cannot be charged a prepayment penalty for early repayment of an FHA home loan. Talk to your loan officer if you are planning to pay off the loan early as there may be a specific procedure for transferring the balance – don’t forget to ask!
As with the down payment mentioned above, the FHA loan rules for qualifying for a condo loan (FICO scores and other financial concerns) do not vary by property type (condo, townhouse, RV, etc.), but your participating lender may have certain “overlays” or additional requirements.
You will need to ask the lender what creditworthiness requirements this institution applies to the loan as these may be higher than the FHA loan program’s minimum FICO score ranges.
Are You Ready For An FHA Condo Loan? The first step to find out? Check your credit reports, see what your debt ratio is, and start planning and saving financially for your new home loan.