If you’re looking to buy a condominium or townhome using a government loan like an FHA or VA loan, you might run into some obstacles. Let’s explore why this can happen, some solutions, and how to get a condo or townhome FHA or VA approved.

Why Government Loans Might Not Work for Condos and Townhomes

  1. Non-Warrantable Properties: Some condominiums and townhomes don’t meet the guidelines required by government loans. This includes things like too many rental units, financial issues, or legal problems within the complex.
  2. Incomplete Construction: If the condominium or townhome complex is new and not fully built or sold, it might not qualify for FHA or VA loans.
  3. Lack of Approval: FHA and VA loans require the entire condo or townhome project to be approved. If the complex isn’t on their approved list, you can’t get a government loan for it.

Solutions

If you really want a specific condo or townhome but can’t get a government loan, here are three solutions:

  1. Get the Complex Approved: You can work with the condo association and your lender to get the condo or townhome complex approved by HUD or VA. This process can take some time but can make the property eligible for government loans.
  2. Look for Other Financing Options: Consider other types of loans like conventional loans or portfolio loans. These might have different requirements and could work for the property you want.
  3. Choose a Different Property: Sometimes the easiest solution is to find a condo or townhome that is already FHA or VA approved. This can save time and make the buying process smoother.

How to Get a Condo FHA or VA Approved

Getting a condo or townhome FHA or VA approved involves several steps. Here’s how you can do it:

  1. Check the Current Status: First, check if the condo or townhome is already on the FHA or VA approved list. You can do this on the HUD and VA websites.
  2. Work with the Association: Talk to the condo association to see if they are willing to apply for approval. They will need to provide financial documents, insurance information, and other paperwork.
  3. Submit the Application: The condo association will work with the lender to submit an application to HUD or VA. This includes a review of the complex’s financial health, the percentage of owner-occupied units, and other factors.
  4. Wait for Approval: The approval process can take several days or even several weeks. If everything is in order, the condo or townhome will be added to the approved list, and you can then use an FHA or VA loan to buy it. For FHA loans, once approved, the complex is HUD approved for the next two years and then it needs to be renewed. The VA does not have a renewal requirement for their approved condos.

Conclusion

Buying a condominium or townhome with a government loan can sometimes be tricky, but understanding the reasons why and knowing your options can help. Whether you work to get the property approved, explore other loan options, or choose a different approved property, you can find a solution that works for you. Happy house hunting!