The FHA stopped granting what were called condo “spot approvals” in 2009. This meant that if you didn’t want to purchase a condo that was on the approved list (typically large buildings), you were simply out of luck.
However, the FHA has recently started lending on condos within two- to four-unit buildings again, according to my colleague Trent Hu at Integrated Mortgage. Here’s a rundown on the basics:
– You need a 3.5% minimum down payment for up to a $729,000 loan amount
– At least 50% of the units have to be owner occupied
– No single owner can own more than one unit in the building
– The building has to have a minimum of 10% of the annual budget in HOA reserves
– New TIC condo conversion properties are acceptable
– 45-day closing timeframe is likely necessary.
There are currently 392 condos listed for up to $729,000 in San Francisco, many of which are situated in buildings that are not on the FHA’s list of approved buildings. So here’s your opportunity to take advantage of an FHA loan and expand your housing possibilities.