Managing HOA and condo communities in King and Pierce counties is part of what we do at Bell Anderson, and today we're talking about whether condo associations should pursue FHA approval. Understanding the Federal Housing Administration The Federal Housing Administration, or the FHA for
Managing HOA and condo communities in King and Pierce counties is part of what we do at Bell Anderson, and today we're talking about whether condo associations should pursue FHA approval.Understanding the Federal Housing Administration
The Federal Housing Administration, or the FHA for short, is a government-owned company that offers insurance to lenders and some buyers to cover losses due to their default on mortgage payments. This allows first time homebuyers and those with smaller down payments to get affordable financing and purchase homes they would not otherwise qualify for with most conventional loans.Pursuing FHA Condo Approval
Getting approved through the FHA is necessary for buyers who want to use that loan to purchase within your community. While a Board is not required to get FHA approval or maintain that status, they do have a duty to do their best to represent the interests of the homeowners in their communities.
Homeowners may see a value in the FHA approval to increase the buying pool when they’re ready to sell their unit. They should consider the cost and benefits of getting on the FHA approved condo list, and make an informed decision. Then, they should be able to explain their reasons to homeowners.
Homeowners may see a value in the FHA approval to increase the buying pool when they’re ready to sell their unit. They should consider the cost and benefits of getting on the FHA approved condo list, and make an informed decision. Then, they should be able to explain their reasons to homeowners.
How Do You know if a Condo is FHA Approved?
Some common reasons that the FHA rejects condominiums are:
Too many non-owner occupied units.
Too many units with delinquent balances.
Not enough of the association’s annual budget goes into reserves.
Rental restrictions in the governing documents.
While Boards can make changes to get the FHA approval, they need to consider whether the costs of doing so are worth the benefit of the increased buying pool. For example, if an association amends their governing documents to get the approval, there will be additional legal and mailing costs. There’s also additional time and effort to get the necessary number of votes, which can be difficult in some communities.
We recommend that each Board weigh their community’s situation to decide if FHA approval is beneficial for
them. The process is difficult and time consuming. An FHA specialist can help you get your package together and submit it to the FHA for a small fee.
If you have any questions about FHA condo approval, please contact us at Bell Anderson & Associates.
Too many non-owner occupied units.
Too many units with delinquent balances.
Not enough of the association’s annual budget goes into reserves.
Rental restrictions in the governing documents.
While Boards can make changes to get the FHA approval, they need to consider whether the costs of doing so are worth the benefit of the increased buying pool. For example, if an association amends their governing documents to get the approval, there will be additional legal and mailing costs. There’s also additional time and effort to get the necessary number of votes, which can be difficult in some communities.
We recommend that each Board weigh their community’s situation to decide if FHA approval is beneficial for
them. The process is difficult and time consuming. An FHA specialist can help you get your package together and submit it to the FHA for a small fee. If you have any questions about FHA condo approval, please contact us at Bell Anderson & Associates.
