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“Spot” Approvals for Non-FHA Approved Condo Complex’s

We are getting a surprisingly large number of purchases for Condo Complexes that are NOT FHA approved. The reason we are getting them now is because the Complexes used to be far out of the FHA allowable price range so the developers never sought FHA approval. But now that prices have plummeted and FHA Loan Limits have increased, these condos are well within FHA range.

Fortunately, FHA allows for “Spot Approvals” for purchases of up to 10% of the units in a non-FHA approved complex. While these Spot Approvals can sometimes be tricky or cumbersome, we have become experts. We have, in fact, recently closed two purchases involving units that were the first to garner FHA financing in the entire complex, as we were the first lender that was able to obtain the necessary FHA Spot Approvals.

Here is quick summary of FHA Financing for those of you who have been out of that arena for awhile. FHA only requires 3.5% for a down payment. Loan amounts go to $729,750. There is an “Up Front Mortgage Insurance Premium” of 1.75% that can be added on to the loan. There is monthly mortgage insurance of 0.55%. Full impound/escrow accounts with taxes and insurance paid monthly are mandatory. And, FHA interest rates tend to be about a quarter percent higher than Fannie Mae rates for similar loan amounts. 

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646