An FHA condo loan also known as section 234(c) is a mortgage insured by the FHA which is designed to assist people who are getting into a new condo. The FHA condo loan insures the loan for 30 years and the building must contain at least 4 units to be considered for an FHA condo loan. Like all FHA loans, FHA will insure up to 97% of the value of the home or condo.
1. Is the condominium complex on HUDs approved condominiums list?
2. If you’re going to have a co-signer they must also be a resident of the condominium.
3. Did the conversion happen more than 1 year ago? If not, this may be why the condominiums to not show up on the HUDs approved condominiums list
Refinancing an FHA Condo Loan
Refinancing an FHA condo loan is the same as any other type of FHA Loan. You have 3 options.
1. FHA Streamline which doesn’t require any kind of appraisals, FICO score or income requirements.
2. FHA Cash Out Refinance An FHA Cash Out Refinance allows borrowers to cash out on their homes equity.
3. Adjustable Rate Mortgage Refinance An Adjustable Rate Mortgage is a mortgage which has an adjustable interest rate.
More About FHA Condo Loans
One of the many purposes of FHA’s mortgage insurance programs is to encourage lenders to make affordable mortgage credit available for non-conventional forms of ownership. Condominium ownership, in which the separate owners of the individual units jointly own the development’s common areas and facilities, is one particularly popular alternative. Insurance for condominiums, such as is provided through Section 234(c), can be important for low- and moderate-income renters who wish to avoid being displaced by the conversion of their apartment building into a condominium.
The program insures a loan for as many as 30 years to purchase a unit in a condominium building–which must contain at least four dwelling units and can be detached or semidetached, a rowhouse, a walk-up, or an elevator structure. The loan is made by a lending institution, such as a mortgage company, bank, or savings and loan association, and is insured by HUD’s Federal Housing Administration (FHA). Most of the features of Section 234(c) mortgage insurance are the same as those governing HUD’s basic FHA mortgage insurance program, Mortgage Insurance for One- to Four-Family Homes (Section 203(b)). For example, downpayment requirements can be low–3 percent or less–because FHA insurance allows homebuyers to finance about 97 percent of the home’s cost through their mortgage. In addition, some closing costs can be financed, reducing up-front costs. And FHA limits some fees that lenders charge for example, the loan origination charge. Finally, FHA sets limits on the size of the mortgage loan that vary with location and the number of units being purchased.