Recently, Northeast Property Group announced that we are extending our expertise in getting communities FHA approved from our current condominium clients in Connecticut to associations that we don’t manage in the state, and beyond! You can read a bit more about that here: FHA Applications
The process of submitting a property for approval to the government’s Federal Housing Authority is complex and involved, requiring thorough documentation, records and reports. This of course means there is a cost associated with getting a condo property approved with FHA, which begs the question ‘why bother?’ Well, quite a few reasons actually.
Reasons to Get FHA Certified
40% of all new loans are FHA Insured
FHA approved condos have a greater average property value increase of 3% compared to unapproved associations
Fannie Mae & Freddie Mac will accept FHA Approval for Condo loans
FHA-approved developments tend to be compliant, more financially solvent and on track with their financial goals
87% percent of First time home buyers indicate that they plan to use a FHA loan
FHA Approved Condos that are for sale attract a larger buyer pool
Lower down payment and FICO score requirements for potential buyers of an FHA Approved Condo
FHA loans are assumable, meaning they can be transferred from one buyer to another
FHA Approval indicates a Financially Healthy Association to all mortgage lenders
How does a HUD condo project approval help me?
The benefits to getting your condominium project approved with HUD are numerous. For starters, certain types of government financing programs become eligible in HUD-approved projects such as FHA, USDA and state-backed programs like CHFA in Connecticut. It has also been recently seen that VA are being declined if the condo project isn’t HUD-approved.
For projects where these types of financing exist, there is a greater pool of buyers which results in shorter marketing times and higher sales prices.
Will a HUD project approval lead to an influx of low-income/Section 8 buyers in our community?
While there are many programs housed in HUD, such as those designed for low income folks, a HUD project approval simply makes government financing programs available. These financing programs are not low-income housing programs; this is a common misconception.
The FHA financing program, for example, has borrowing criteria in place that is almost as strict as conventional loans. Those who purchase with an FHA loan are no less qualified to own a condominium unit than those who purchase with a conventional loan.
How can I find if my condominium project is approved with HUD?
HUD has a condominium look-up tool located here.
It can be temperamental if the name of the condo that you are searching is typed slightly different than it is in HUD’s system. Best practice has shown to look up all approved condos by city and state and scroll through the alphabetical listing.
How long does the process take to get a condo project HUD-approved?
The most accurate answer is ‘it depends.’ It is highly dependent upon how quickly the paperwork can be collected. Once an approval package is submitted to HUD, it can take up to 30 days to be reviewed.
Projects can get approved in as little as 3 weeks but some have taken as long as 1 ½ years. If it takes that long, there are probably issues with the project that need to be fixed prior to approval.
If you want your project approved as quickly as possible, it is best to submit ALL of the required paperwork to HUD the first time.
What is needed for my project to get approved with HUD?
There are certain criteria that need to be met in order for a condominium project to get approved with HUD. The most important of these include:
- The makeup of the project does not contain too many investors or a single entity that could arrest control of the association,
- The project is financially sound and maintains an adequate amount of reserve funds for future repairs or catastrophes,
- The legal governing documents adhere to local laws, do not allow for discrimination and create a community that is acceptable to HUD’s tolerances, and Proper insurance policies are in place.
Where can I find help to get my condo project approved with HUD?
Easy. Give us a call, send an email, or complete the request form below! Phone: (860) 437-7005