Although not commonly known, there is a way to get FHA financing in Orange County for Condo's that are not currently FHA approved. This process is known as FHA Condo Spot Approval. To find out if a condo project is already FHA approved, you can visit the HUD website and type in the Condo Tract ID. Click here for the link to the correction section of the HUD website.

Orange County FHA Condo's

There are quite a few condo projects in Orange County, CA that are not FHA approved. This is because for several years, with property values so high while the FHA loan limits were so low, very few home buyers needed FHA financing. Things have changed. In 2008 HUD increased the FHA loan limits in Orange County to $729,750. The old limit was only $362,790.

There is a way to deal with condo projects that are not FHa approved. It is called “FHA Spot Approval” and is not a very difficult process for a lender who has previous experience with FHA Spot Approvals. 

Orange County FHA Spot Approval Requirements

• The project must be competed. There should not be any ongoing construction of additional units or common areas.
• Control of the common areas for the project must have been turned over to the home owners association for at least one year.
• The home owners association must provide proof of insurance. (Hazard, liability, flood)
• Individual units in the project must be owned in fee simple or be an eligible leasehold interest. the project’s legal documents must provide for undivided ownership of common areas by unit owners. By virtue of this ownership, unit owners must have the right to use all facilities and unrestricted common elements.
• The projects documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title is generally unacceptable. Such restrictions include rights of first refusal and restrictive covenants. Certain governmental or nonprofit programs designed to assist in the purchase or rental of low-moderate-income housing are exempted from the restrictions on conveyance provisions.
• 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 the project. “Entity” includes as 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.
• HUD recognized that the 10% cap on the number of units that may secure FHA insured mortgages in a given project can place a small project at a disadvantage, since only a few units will invoke the limit. Accordingly, a two-tiered system was established. For condo projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time. Condo projects consisting of 30 units or less, can have up to 20% of the units encumbered by FHA insured mortgages.

Orange County First Time Buyers should be aware of the advantages FHA offers. They should not shy away for condo's just because they are not FHA approved. 

***There are changes effective October 1, 2009 that put an end to the Spot Approval process. Check out the latest on FHA financing for condo's in Orange County.****

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by California Dept. of Real Estate.  Lic. # 01190897