Did you know that not all condos are approved for FHA or VA financing? That's right… in order to qualify for FHA/VA financing a condomimium project must be on their pre-approved list. If these are your only financing options, be sure to find out if a condo is FHA/VA approved before falling in love with it!
MLS listings are supposed to state whether or not a project is FHA/DVA appproved, but it is not included in all listings… and even if included, information is not always accurate. Some listings state they are approved when in actuality they are not.
Best to check for yourself…
Underwriting is also getting more picky in approving condominium projects with conventional financing.
Some potential red flags…
- Multiple units owned by the same investor
- Multiple units delinquent on association dues
- High percentage of rental units
- Law suits
- Commercial use
- Inadequate insurance
- Inadequate reserves
Be sure to check with your lender for condominium requirements early in the process. I have seen some instances where a 25% down payment removes all examination of the complex. If project reivew is required, ask your lender to request and review the 'condo questionnaire' as soon as possible.
Also be aware that some properties that look like townhouses are considered condos for financing purposes… it depends on the legal description.