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I am about to give an offer to buy a condo, but just realized that there might be some complications in getting a loan.
My situation:
- Condo is not FHA approved.
- I am looking for a non-FHA Conventional loan.
- Will be putting down 20% down payment.
- This will be a primary residence. (First home)
Will there be problems in getting conventional loan? Or is it a problem only for FHA loans.
Update - I verified the resale certificate and all seems good. The owner occupancy is 80+ percent. (It is detached single family homes arranged as condominium)
This is the list of questions my mortgage broker wanted answers for and I verified most of these from the resale certificate:
1. Is there any law suit?
2. Is there more than 15% owner late for HOA due payment over 30 days?
3. Master insurance needs to cover min $1 million
4. Current reserve balance is enough to cover future renovation projects
5. Current budget has moved 10% income to reserve
6. any commercial space over 25%?
7. more than 51% owner occupancy.
Last edited by Seattler123; 06-05-2017 at 09:05 PM..
I would ask the listing agent or contact the association because they should know (hopefully). Several condos I looked at required 25% down because of low owner occupancy rates.
Update - I verified the resale certificate and all seems good. The owner occupancy is 80+ percent. (It is detached single family homes arranged as condominium)
This is the list of questions my mortgage broker wanted answers for and I verified most of these from the resale certificate:
1. Is there any law suit?
2. Is there more than 15% owner late for HOA due payment over 30 days?
3. Master insurance needs to cover min $1 million
4. Current reserve balance is enough to cover future renovation projects
5. Current budget has moved 10% income to reserve
6. any commercial space over 25%?
7. more than 51% owner occupancy.
Last edited by Seattler123; 06-05-2017 at 09:06 PM..
At 20% down you are in a full-review situation requiring greater scrutiny of the association. With a greater down payment (25% or more I think, could be wrong) you move to a limited review which will qualify some associations that can't pass full review.
Are the houses considered "single family" or "condos"? Where I live even many townhouses are considered single family even though they may be attached on either or both sides. I guess it may have to do with whether or not anybody is above you? Here the VA, which is as strict as the FHA, if not more so, will do a mortgage on something considered single family and they also do some condos.
My neighbor got a mortgage for the condo he lives in through Quicken Loans with 3 1/2% down and these are not VA or FHA approved.
Are the houses considered "single family" or "condos"? Where I live even many townhouses are considered single family even though they may be attached on either or both sides. I guess it may have to do with whether or not anybody is above you? Here the VA, which is as strict as the FHA, if not more so, will do a mortgage on something considered single family and they also do some condos.
My neighbor got a mortgage for the condo he lives in through Quicken Loans with 3 1/2% down and these are not VA or FHA approved.
I can't speak for the OP, but we have a lot of free standing condo developments around here. If it has been built in the last 25-30 years, almost all of them are free standing or attached to only one other unit.
Are the houses considered "single family" or "condos"? Where I live even many townhouses are considered single family even though they may be attached on either or both sides. I guess it may have to do with whether or not anybody is above you? Here the VA, which is as strict as the FHA, if not more so, will do a mortgage on something considered single family and they also do some condos.
My neighbor got a mortgage for the condo he lives in through Quicken Loans with 3 1/2% down and these are not VA or FHA approved.
It has nothing to do with if "anybody is above you."
High rises, duplexes, single family, quads, and others can be condos.
I am about to give an offer to buy a condo, but just realized that there might be some complications in getting a loan.
My situation:
- Condo is not FHA approved.
- I am looking for a non-FHA Conventional loan.
- Will be putting down 20% down payment.
- This will be a primary residence. (First home)
Will there be problems in getting conventional loan? Or is it a problem only for FHA loans.
Update - I verified the resale certificate and all seems good. The owner occupancy is 80+ percent. (It is detached single family homes arranged as condominium)
This is the list of questions my mortgage broker wanted answers for and I verified most of these from the resale certificate:
1. Is there any law suit?
2. Is there more than 15% owner late for HOA due payment over 30 days?
3. Master insurance needs to cover min $1 million
4. Current reserve balance is enough to cover future renovation projects
5. Current budget has moved 10% income to reserve
6. any commercial space over 25%?
7. more than 51% owner occupancy.
Not being FHA approved means nothing. Don't let that be part of your decision.
We have 386 associations in 14 square miles. None are FHA approved and only 3 are VA approved. There is no problem selling. A quality property doesn't need approval. There will be buyers.
Remember your list is the minimum. 15% late payments would really hurt most associations.
During the steps of your purchase, take into consideration all the things you listed. Consider if you want to deal with those factors during resale when hoping to obtain a buyer. What passes today may not pass at resale. Example-Numbers 4, 7, 2, and 1.
Based on experience, whether condo or single family, I like to see a few more things particularly if I'm unfamiliar with the area. To cover myself not just the lender.
A reserve study ( not sure if requirement is the same all around but some areas require one every 5 years or less). I'd check the sox offender registry map...many are very easily accessed, some not so much. It's often recommended to read the minutes from the last several board meetings, if they exist. If there are meetings but not minutes...not so good. Seems like every place has to have a meeting at least once a year anyway.
Based on a near disaster....well,a disaster that took a group fight to correct....I'd check the minutes and agenda items for the last many months of the local board that approves things like major construction and changes in the general area.
I'd check the flood plain map, the elevation map, the water lines and sewer lines particularly in areas where the soil is a problem. Actually usually easily done with online maps.
My list is elsewhere so that's all off the top of my head.
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