Having Massachusetts FHA Loan Condominium Approval is Wise
Author Bill Gassett owns Maximum Real Estate Exposure.
When selling your Massachusetts condo, it makes sense to open it up to the maximum number of buyers. The more potential buyers, the greater chances you have a quick sale for desirable terms.
Many condo owners do not realize whether their condominium complex is approved for an FHA loan. Not every development has FHA approval, but it is certainly worth it!
Many first-time home buyers utilize FHA loans due to their low down payment requirements and relaxed credit scoring.
You could lose out on some of these buyers when you don't have FHA condo approval. It behooves owners to take the necessary steps to ensure approval. The same can be said if you own a townhouse.
We will explore FHA condo approval requirements and how you can get them. Let's dig in.
What is an FHA Loan?
An FHA loan is a loan through the Federal Housing Administration designed to help people with lower credit scores purchase a home.
FHA loans allow buyers to make a smaller down payment of only 3.5% of the purchase price. These loans are typically easier to qualify for than other loans, making them an attractive option for many first-time home buyers.
Buyers can also take advantage of lower closing costs and more flexible repayment terms with FHA loans. They are an ideal loan for those who wish to buy a condo in Massachusetts.
What is an FHA Condo Approval?
An FHA condo approval is an endorsement from the Federal Housing Administration for a particular condominium development.
The approval indicates that the complex meets specific standards for safety, soundness, and financial stability set forth by the FHA.
For a condominium development to be approved, it must meet certain criteria, such as owner occupancy, insurance requirements, and a review of the condominium association’s financials.
Once FHA condo approval is granted, a buyer may use an FHA loan to purchase a unit in the complex. This is especially attractive to buyers since FHA loans typically require a lower down payment than most conventional loan programs.
You Can Get Spot Approval Now For Individual Units
If you have a thick-headed, stubborn condominium association that doesn't see the value in having their Massachusetts condo project FHA approved, all hope is not lost.
You can now get "spot approval" for individual condo units. So, if you are selling a condo and want to open up your unit to more potential buyers, you can pay to approve it.
What Are The FHA Approval Requirements For Condos?
- Only ten percent can be FHA insured if a condo project has ten or more units. Only two can have FHA loans when there are fewer than ten units.
- Owner occupancy must be higher than fifty percent.
- At least eighty-five percent of the unit owners must be current with association dues.
- There must be adequate insurance, and the association must have ten percent or more of the budget in the reserve fund.
- There cannot be more than thirty-five percent commercial space.
- Condo projects must be recertified every three years to stay current.
It is also important to note there are FHA loan inspection requirements. Properties must meet specific condition requirements.
What Are The Benefits of FHA Condo Approval in Massachusetts?
Having FHA condo approval in Massachusetts can greatly benefit condo owners. Not only does it open up the possibility of more potential buyers, but also helps increase the property's value.
With more buyers vying for any property, the odds are you will sell for more money, possibly with a bidding war in strong seller markets.
FHA condo approval also helps to keep condo complexes in good condition. The FHA requires that condo complexes meet certain safety, soundness, and financial stability standards to be approved.
Approval helps ensure the complex is well-maintained, and the homeowners’ association is financially responsible.
How Much Does FHA Condo Approval Cost in Massachusetts?
The cost of getting FHA condo approval is $850 when the project has never been approved. New construction projects cost $1500.
When a condo development expires over six months, reapproval costs $850. You can get a condo reapproval before expiration for $765.
Getting FHA approval usually takes around two to four weeks from the time of application.
Final Thoughts on Massachusetts FHA Condo Approval
As you can see, having FHA condo approval is a worthwhile exercise when you are selling. The potential for more buyers brings the opportunity for selling quicker and for more money. You could easily find your property under contract quicker than others.
Did you enjoy this advice on having FHA loan approval for your Massachusetts condo? See other real estate articles on NewsBreak for more timely tips and advice. Bill often writes about general real estate, mortgages, finance, moving, and home improvement.