November 1, 2017
What kind of house can I buy with an FHA loan? Many first time home buyers want to know if FHA mortgages can be used to buy certain kinds of property including condos, duplexes, mobile homes, etc.
FHA mortgage loans are flexible enough to purchase many different types of houses depending on the housing market, the lender, and local market standards. Not all FHA lenders will offer all the FHA loan types available to them, so it’s good to ask early if the property type you are interested in is an option.
FHA Loans For Typical Suburban Homes
The most obvious type of home loan is definitely available for purchase with an FHA mortgage. A suburban home can be existing construction, new construction, or built to suit. FHA loan requirements for homes that are built specifically for the borrower are different than existing construction loans.
If you need an FHA One-Time Close construction loan, talk to a loan officer about what this type of transaction will require in order to properly budget and plan for your purchase.
Homes purchased with FHA mortgages may have as many as four living units.
FHA Loans For Mobile Homes
Qualifying mobile homes and manufactured homes may also be purchased with FHA mortgages. These properties are required to have a permanent foundation at closing time, and the foundation must meet both FHA requirements and any state/local building code that is applicable.
You can use an FHA loan to buy both the mobile home and the land it is to be placed on. FHA loans are not possible for any home that does not have a permanent foundation or a foundation that cannot be brought into compliance.
FHA Loans For Condo Units
FHA home loans may be used to purchase condo units in approved condominium projects. The condo must be on or added to the FHA approval list. You will have to work with your lender to determine how to add a condo project to that list. FHA loan rules do not allow loan approval on condo units which have restrictions on the borrower’s ability to freely sell the property later on.
That includes “right of first refusal” clauses found in some condo owner’s association bylaws. If you don’t know whether that is a factor in your transaction or not, speak with your loan officer to see what is known about the property you want to buy, or contact the condo owner’s association to ask what might apply in your case.
FHA Loans For Mixed Use Property
Some borrowers wonder about buying a home with an FHA mortgage that has non-residential use, or is zoned as mixed residential and commercial. FHA loan rules generally leave the zoning issues up to the local jurisdiction so you will need to find out what is possible in your area based on zoning laws, local precedent, etc. FHA rules do address the actual non-residential use of the home, stating that the home must be primarily residential in nature, and any non-residential use the property is required to be “subordinate” to the residential use of the house.
You may be permitted to run a business from your home with an FHA mortgage, but your home must come first, As a rule of thumb, if less than half of the floor space of the home is used for non-residential purposes, your chances of FHA loan approval are much better.
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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