Back in the good old days (aka, pre-2008-09 financial collapse), a buyer with good credit could buy a condominium unit with less than 20% down by relying on private mortgage insurance. These days all we have are our memories.
As a seller, it is not enough to find a buyer willing to pay an acceptable purchase price. First, mortgage lenders have to be satisfied with the appraisal of the condo unit. I've written previously about the problems with appraisals today and it's negative impact on transactions.
Second, the buyer has to come up with an adequate down payment. Many buyers have the cash flow to handle the mortgage payment but coming up with a big enough down payment can be a challenge.
One way out of the wilderness is for the condominium development to seek approval with HUD for FHA-insured financing. As an FHA-approved condominium, buyers of units in the approved condominium development can obtain FHA-insured acquisition financing with its lower down payment requirements.
Recently, the FHA changed its rules for condominiums, who must now recertify 2 years as an FHA-approved development. The application to recertify must be made within 6 month of the condo's current expiration date. A failure to timely reapply will result in having to go through the full application process.
For more information, click here to search the FHA web site for condominium projects that have applied, including both approved and rejected applications. Click here to access HUD's Condominium Project Approval and Processing Guide.
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