FAQs About FHA Approved Condos
What are some of the recent changes related to FHA condo approval?
With the increasing reliance of the residential home buyers on FHA financing, a number of changes have been introduced by the Federal Home Administration
to deal with the new situation. These changes have also affected the condo communities.
Before the introduction of the changes, borrowers seeking FHA loans on condos need not have to worry much about the FHA condo approval. Back then, either the developer got a condo approved right at the start or a spot approval can be availed as and when needed. With the changes made in 2010, the FHA spot approval process has been completely eliminated and all existing FHA approved condominiums have been given an expiry date, after which their prior certification will no longer be valid.
What are FHA approved Condos?
Department of Housing and Urban Development (HUD)
FHA certification for condos to become eligible for FHA loans. The new process regarding condo approvals is put in place to ensure that the condos on which FHA financing is to be issued are financially sound and managed properly. This is a type of risk mitigation process to prevent the future defaults and foreclosures on FHA financed condo properties. Unlike the process used before, HUD currently conducts a thorough analysis of a number of documents regarding the financials, maintenance, insurance and management of condo developments.
Is the FHA certification process new?
No, HUD always had a certification process regarding the approval of condos. But recently, they have introduced a number of changes related to the guidelines and requirements for condos. Any condominium associations with prior approval were given expiration dates and almost all of the prior FHA/HUD approved condominium
certifications expired on Sept 30, 2011.
Is it mandatory to have FHA certification?
While it is not required by law, it is a must for buyers or owners of condos seeking loans through FHA insured loan programs. With increasing number of buyers relying on FHA loans, a condo approval can substantially increase the marketability of condo units within approved developments, communities and complexes.
How long does it take for the entire process involved in FHA condo approvals?
If all the necessary documentation mentioned in the newly issued guidelines is submitted to HUD, the FHA certification process for condos can take between 30 to 60 days. Only those HOAs that meet the stringent new requirements can expect to be approved. Therefore, a thorough assessment of the current situation based on the approval guidelines can help determine your chances of approval prior to submitting a condo certification application to HUD.
How much does it cost to become a FHA approved condo?
The total cost varies depending on how you approach the approval process. Some attorneys and specialists charge as much as $5,000, while some online FHA condo approval consultants charge as low as $500. If your HOA has the necessary time and resources, the application for certification may be filed without the need of external consultant. Doing so, will cost you nothing except the HUD fee for reviewing the application.
For how long will the FHA certification be valid?
Currently, a FHA condo certification is valid for a period of two years. At the end of two years, a new application has to be filed for re-certification. In the near future, HUD is expected to streamline the process associated with condo re-certification.