Financing a home is not easy. Even if you’re looking for a condo rather than a home, it can still be difficult. One option available to you would be the Federal Housing Association 234(c). This program is useful in that it generally gives approximately a 30-year mortgage loan, while keeping initial down payments low and can give lenders the confidence to give you a loan if you are in a lower income bracket. However, there are some rules associated with the FHA 234(c).

FHA 234(c) rules include:

•    It is only available for the purchase of condo style homes. This means that what you are buying has to be either an attached or semi-attached home, a row house, a walk-up, or a structure containing an elevator.

•    If the building was once a rental residence such as an apartment building, and is now a condo, the conversion must be at least one year old.

•    If your condo is currently a rental-type residence, the FHA 234(c) can be used if you and most of the other residents agree to turn it into a condo-style dwelling.

There is another option called “spot approval” which exists for use if the condo you would like to purchase does not initially qualify for the FHA 234(c).

The following conditions must be met to get spot approval:

•    The condo must be complete.
•    The unit owners association must have had control of common areas for at least a year.
•    There must be proof of the appropriate hazard, liability, and flood insurance.
•    At least 90% of the units must have been sold.
•    At least 51% of the units must be occupied by the owner.
•    No single entity may own more than 10% of the units.
•    Documents should not place any legal restrictions on conveyance.
•    Individual units must be owned in fee simple or be an eligible leasehold interest.

•    Condos with more than 30 units can only have 10% of the units with FHA insured loans. Condos with less than 30 units may have up to 20% of the units with FHA loans.

Originally from Condo.com – Condo News