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FHA Loans: Approved and Non-Approved Properties

September 30, 2011

FHA loans for single family, new purchase properties have a set of requirements and regulations covering the types of homes that can be purchased with an FHA insured mortgage.

Many people envision a traditional suburban home when thinking of buying property with an FHA mortgage, but FHA-approved condo projects, town homes, row houses, and even detached (or semi-detached) housing can be approved for an FHA loan if the property meets the right standards.

Sometimes the phrase “single-family home” misleads a potential FHA borrower into thinking they can only purchase single unit properties. But according to the official site, “FHA’s single family programs are limited to one- to four-family properties that are owner-occupied principal residences. The key to being able to purchase a multi-unit property (capable of housing up to four families) is that the property is owner-occupied.

The FHA requires the borrower to certify they will use the property as the primary residence, making a legally binding statement to that effect when signing loan documents.

Did you know the FHA has a list of properties it will not approve an FHA insured mortgage for? In the case of single-family homes, the FHA won’t insure a loan for any commercial enterprise. It will not approve an FHA mortgage for hotels, boarding houses or tourist dwellings. You are not allowed to get an FHA home loan to open a bed and breakfast or a private club, and the FHA also will not approve loans for a frat or sorority house.

The FHA clearly states in HUD publication 4155.1, “FHA’s single family programs are limited to owner-occupied principal residences only.” For more information on these requirements, call the FHA at 1-800-CALL-FHA (225-5342).

Joe Wallace - Staff Writer

By Joe Wallace

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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