Buying a condo with an FHA mortgage loan is an option many borrowers might be interested in but sometimes assumptions about the FHA home loan program might cloud the issue. Here are some things you should know about FHA mortgages for condo purchases.
FHA Condo Loans For First-Time Home Buyers
FHA condo loans are open to first-time buyers and experienced home owners alike. You will be approved for the FHA condo loan based on your financial qualifications rather than whether or not you have owned property before.
FHA Condo Loans Have Certain Advantages
The down payment requirements for FHA home loans do not change based on the type of property you purchase, so you are still required to financially qualify but your down payment requirement does not get adjusted because you are buying a condo unit and not a typical suburban home.
FHA home loans do not allow penalties for early payoff of the mortgage, so if you make larger monthly payments with the goal of an early payoff you will not be financially penalized for doing so.
FHA Condo loans also allow borrowers to use down payment assistance from approved sources, so you can get help from family, friends, or employers to come up with your 3.5% down payment on the FHA condo loan.
FHA Condo Loans Do Not Permit Restrictive Covenants
An FHA home loan will not be approved for a mortgage that has “right of first refusal” clauses in the condo owner association bylaws or agreements. You cannot be restricted from freely selling or transferring your FHA condo loan to another person.
FHA Condo Loans Have The Same Basic FHA Home Loan Minimum FICO Score Requirements
There are no alternative FHA loan rules for condo loans where FICO scores and other financial qualifications are concerned-you won’t find FHA home loan rules requiring higher FICO scores just because it’s a condo unit you wish to purchase.
Remember that additional lender standards may apply, so you will need to discuss the lender’s rules for condo loans in addition to the FHA program standards.
FHA condo loans are available to any financially qualified borrower-the first step is to check your credit reports, see what your debt ratio is like, and begin financially planning for a mortgage loan. You can speak to a participating lender to learn more about down payment requirements and FICO score rules before committing to a home loan application.