Have you been wanting to buy a condominium in Houston? There are a few recent construction and foreclosure condos that have come up on the market in Houston. However, financing has become more difficult for condominiums as lenders tighten their loan approval process. Condominiums tend to resemble apartments, consisting of several units in the same building or complex. Condos share common areas like courtyards and lobbies and some even provide special services like concierge, valet, dry cleaning and other services. Some have gyms, while others have pools and saunas. Plenty of condo owners choose to buy a condo because they love the convenience of having these amenities right outside their doorways. It is important to understand financing requirements for conventional and FHA loans.
Conventional - Established Project
- All unites, amenities, and common areas in the project are 100 completed and not subject to any additional phasing or additions.
- The unit owners control the homeowners association.
- At least 90 percent of the total units in the project have been conveyed (sold and closed) to unit purchasers other than the developer.
- At least 51% of the units conveyed must be primary or secondary homes.
- Real Estate Owned (REO) units that are for sale (not rented) may be considered as owner-occupied in the calculation of the project owner occupancy requirements.
- No more than 15% of the total units in a project can be 30 days or more past due with the HOA dues in an established project.
- Commercial space must not exceed 20% of the total square footage of the project.
- A single entity cannot own more than 10% of the total units in the project.
Conventional - New Project
- All units, amenities and common areas in the project are not fully completed or subject to additional phasing or annexation.
- Fewer than 90% of the total number of units in the project have been conveyed (sold and closed) to unit purchasers other than the developer.
- The developer has not turned control of the homeowners association over to the unit owners.
- At least 70% of the total units in the project must be sold to owner occupied purchasers (primary or second homes). Units are closed and conveyed or under contract with bona fide purchaser (pre-sold) may be considered sold.
- Commercial Space must not exceed 20% of the total square footage of the project.
- A single entity cannot own more than 10% of the total units in the project.
FHA Spot Approval
- The condominium project must be complete. There should be no ongoing or anticipated addition of any units, common elements and/or facilities.
- Control of the common areas of the project must have been turned over to the unit owners association for at least a year.
- At least 90% of the units in the project must have been sold.
- At least 51% of the units in the project must be owner-occupied.
- No single entity may own more than 10% of the units in a project. “Entity” includes an individual partnership, corporation, limited liability company, limited liability partnership, joint venture, investor group or other natural or legal person qualified to hold an interest in real property. The 10% restriction does not apply when the ownership of less than three units would disqualify an otherwise eligible project.
A special thanks to:
Roger Ryman
Certifed Mortgage Planner
Prime Lending
550 Post Oak Blvd Ste. 350
Houston, TX 77027
713-446-9666 Cell
rryman@primelending.com
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