How to check if a condo complex has FHA certification.
About 2-3 years ago, HUD de-certified most condominium complexes for FHA certification, so in order to get an FHA loan the complex would have to “renew” or “re-certify”. Many HOA’s do not even realize they have lost their certification, and very often you will see properties advertised as accepting FHA financing, when in fact, they cannot because they are not certified. FHA can be a real benefit for condo communities in the under $280,000 price range (the limit in the Austin area). Very often these are first time home purchases. First time home purchasers do not have the benefit of selling a home and getting all the equity in-hand, so they have to save it up for that first purchase. With FHA they only need 3.5% downpayment (as of 1/1/2013). Without FHA, buyers are typically looking at much higher down payments 10-20% down. This eliminates a lot of potential buyers. With FHA certification this opens up a whole new market of potential buyers. To see if a complex has FHA certification go the the HUD website HUD FHA Approved Condominiums (oddly, it only operates during business hours) Normally, I simply enter the state, then the first few letters of the complex name. You can filter it further by adding city or zip, but usually you can see quickly a list of condominiums. If it is not on the list, it does not have FHA certification and probably never did. If it is on the list, be sure to check the far right column to see if it has expired or not. Quite often, a complex has had approval and it has expired. No FHA loans can be originated in the complex until it has been re-certified.
Often HOA management companies seem to me to not be willing to pursue this, even though it is of great benefit to the community and its owners. HOA Boards are not really aware of this since most members are volunteer owners. This is a real opportunity that gets past by too often. The complexes that get this done have a distinct advantage over the ones that don’t. Probably for $2,000 this can be done with help from a Direct Endorsement Lender or for even less if somebody is willing to go to HUD direct. Either way it is well worth it.