For would-be borrowers looking to purchase or refinance a condominium unit and looking for government financing such as a VA loan or an FHA loan, you might come to find getting such a mortgage for a condominium unit that is not HUD-approved might prove to be difficult. Here are some things you need to consider as relates to getting government financing on condominium units…
In order to get an FHA mortgage or a VA mortgage for a condominium unit the condominium unit itself or the entire complex must be HUD-approved. HUD oversees the Department of Veterans Affairs and the Federal Housing Administration. The federal government dictates what type of complexes will be government signed off.
In order to get a VA loan on a condominium the condominium must be HUD-approved. Or if the condominium is truly a townhome no special approval is needed, or if the property happens to be a PUD AKA a planned unit development also no special improvement is required. If the unit is truly a condominium you might be told by your lender it will not work.
This is not necessarily accurate. Not all mortgage companies operate the same way some mortgage companies don’t have a desire or the motivation or the resources to get your condominium unit you’re interested in financing HUD-approved. With the right lender however it can be accomplished and there are two methods of doing this. The first one is to get the individual unit approved which is called spot approval and the second is the whole entire complex would be having to be HUD-approved. The latter of course involves longer time frames, can end up being more costly and can be problematic to a purchase transaction particularly if there’s a specific deadline that you and the seller have agreed to. The spot approval is a far easier process, the lender would engage directly with the homeowner’s association and get the individual condominium unit you’re looking to purchase, or refinance underwritten and approved with that mortgage company they in turn then provide the information to HUD to sign off.
So long as the underwriter approves the loan generally but, not always HUD will usually sign off on an individual spot approval. This could be particularly valuable for an FHA buyer with 3.5% down or a VA buyer with no money down. If for whatever reason the lender tells you it cannot be HUD-approved get a second or even a third opinion. You might just come to find the property you’re interested in purchasing not only can be HUD approved, but you can do it with an extraordinarily little down payment. Add in a seller credit for a buy-down on your interest rate and you have a recipe for financial success.
If you’re looking to get qualified for a mortgage or want to learn more about what it might take to get a low-down payment government-insured affordable mortgage to get a complimentary rate quote today!
RELATED MORTGAGE ADVICE FROM SCOTT SHELDON
View More from The Mortgage Files:
begin your mortgage journey with sonoma county mortgages
Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!