Q: I tried to sell my condo in Bustleton and I signed an agreement of sale on it, but the sale never went through. I was told it is because I am “not FHA approved.” What does that even mean?
A: It means your buyer was approved for an FHA loan but your condominium does not meet FHA requirements. If your condominium complex is not approved by the Federal Housing Authority, homebuyers will be unable to use an FHA loan to secure financing for your unit.
Find out if your condo is FHA approved on the Department of Housing and Urban Development’s website.
Your Home Owners Association or Condo Association can try to make application to HUD for FHA approval. But be forewarned: applying for FHA approval does not mean your condo complex will actually get approved. Fannie Mae has guidelines for your association’s reserves and the ratio of owner occupied properties to investment properties, among other requirements.
Get the lowdown on the approval process here
FHA has recently taken an adverse approach to condos because of the high number of foreclosures. Unfortunately for FHA-approved homebuyers in Philadelphia looking for condos, and home-sellers of condos, there are many more unapproved FHA condo complexes than approved. Your best bet is to find a buyer that has the ability to either obtain a conventional mortgage or pay cash.
Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.