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FHA Loan Questions: Are FHA Loans Available For Condo Units?

014When you think about your choices for buying a home using an FHA mortgage, it’s easy to forget that all types of properties can be considered for purchase–not just a typical house in the suburbs. The FHA does allow loans for condo units, and there’s a section of the FHA loan rulebook (HUD 4155.1) that discusses the requirements for this type of purchase.

According to HUD 4155.1 Chapter Four Section B, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured”. But what does the FHA define as a “condo”? How are they different than other types of housing? According to FHA loan rules:

“A condominium is a multi-unit project that

• has individually-owned units, which may be either

− attached in one or more structures, or
− detached from each other, and

• is essentially residential in use (for FHA purposes).”

The condo “regime” as it’s described in these rules, is governed by local or state ordinances, “characterized by fee simple ownership of a unit which is defined in the condominium documents, together with common areas. The property interest in these areas is both common and undivided on the part of all unit owners, each of whom belongs to the Homeowners’ Association (HOA) that typically maintains the property and collects assessments or dues from each unit owner.”

There are also descriptions of “manufactured housing condominiums” and “site condominium” projects, both of which may be eligible for FHA loans under the right circumstances.

For example, when it comes to site condos, FHA loan rules say, “Site Condominiums are single family totally detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership. They have no shared garages or any other attached buildings. Project approval is not required for site condominiums unless they do not meet this definition.”

For more information on FHA condo loans, speak to a loan officer about your specific needs–you may be surprised to learn what your options are for this type of home loan application.

Do you have questions about FHA loans? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

October 23, 2013

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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