VA and FHA Loans For Condos
My Lender Told Me I Can’t Get A Loan To Buy That Condo! Not with a VA-guaranteed or FHA loan anyway… I was told I could use VA and FHA loans for condos.
Why not? VA and FHA will only support home loans for buying condos in condo communities they approve.
Military personnel are generally permitted to obtain VA-guaranteed loans for buying a home. The loan is provided by a lender such as a bank, credit union, or a mortgage company, and partially guaranteed by the VA. This VA guarantee makes it easier for lenders to provide 100% financing so buyers do not have to provide a down payment.
FHA loans offer benefits, too, such as a very small down payment and lower credit score requirements.
Yet, the VA and FHA do not support loans for all properties. When it comes to condos, the condo community in which a buyer wants to purchase must be approved by the VA or FHA as applicable. If it is not on the VA’s or FHA’s list of approved condos, a buyer will not be eligible for a VA-guaranteed loan nor an FHA loan to buy in that condo community.
The process of adding a condo community to the VA’s approval list begins with a lender submitting a request to the VA. The approval process can take a few months.
Department of Housing and Urban Development (HUD) manages the condo community approval process for FHA. Condo communities and even single units can be approved by either HUD or an authorized lender.
HUD’s searchable database for FHA-approved condos is available at the following website: https://entp.hud.gov/idapp/html/condlook.cfm.
VA’s searchable database for VA-approved condos is available at the following website: https://lgy.va.gov/lgyhub/condo-report.
NOTE: Not all condos are styled like apartments in high-rise buildings. “Condo” refers to a type of property ownership, not a structural style of a home. Many communities with townhomes are condo communities.
When identifying communities for your new home that may include a property owners’ association (i.e., often referred to as a Homeowners’ Association) or a condo association, verify whether or not a condo association exists. If there is a condo association, use the VA and FHA databases to verify that you can use a VA or FHA loan to buy a unit there. The communities’ property managers can inform you of the presence of any condo association and its name. Local public tax and title records can also be used. This information is needed when you search the VA and FHA databases.
Even if you are not considering a VA-guaranteed loan or an FHA loan, this research is important because you may discover that either a VA-guaranteed loan or an FHA loan may be your best loan option.
