FHA Seminar at Yale Lofts

Yale Lofts is having a seminar on FHA loans tonight at 6pm.

Is there a reader who would be willing to give a high level explanation of FHA at Yale Lofts? I haven’t had much exposure to FHA. In the past I’ve heard of FHA loans for the purpose of first time buyers rehabbing a dilapidated house. The idea of an FHA loan with a new construction hi-rise is new for me. Is this available at many condos or is Yale Lofts unique?

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  1. 1

    Ethical Homes says

    FHA loans weren’t very popular in the last few years because there were so many other more flexible options, which is why you probably haven’t seen much of them recently. Now that lenders have realized that most of those other options were far too risky, those other options have gone away, leaving FHA loans as one of the only ways for most people to buy right now with a small down payment (min. down payment on an FHA loan is 2.25% of purchase price right now, going up to 3.5% on 1/1/09). So they are very popular at the moment (around a quarter of all loans as of September), and will probably be getting even more popular in coming months.

    There are many different kinds of FHA loans; the 203(k) program is probably the one that you’ve heard of before, which allows for buyers to finance some of the costs of rehabbing a property into their original loan (although it’s not limited to first-time buyers).

    Another of the FHA programs is the 234(c) program, which allows for loans to purchase condo units. One potential issue w/ those loans is that the condo development itself must be approved by FHA as meeting certain guidelines (e.g. not having too many units owned by investors, more than 50% of units already sold).

    So all the Yale Lofts folks are saying is that at least one person has bought a unit there using an FHA loan, which means that the building as a whole is on the approved list. For people wanting to buy using FHA loans at other condo developments, it’s usually a pretty straightforward (although sometimes time-consuming) process to get the development approved; the only buyers who really need to worry are ones looking at extremely-new construction (where fewer than half of the units have been sold) and/or ones looking at new small construction (since more than half of the units in, say, a rowhouse that’s been split into 4 units means that 3 of the 4 units need to have been sold already). With that said, it’s also essential that buyers work with a clueful lender who understands FHA loans and who can tell the buyers BEFORE they put in an offer on the property whether it will in fact be possible to get it approved through FHA.

  2. 3

    fourthandeye says

    @ethical homes – thanks for your writeup. I am a bit surprised that Yale has already had 50% of units go to settlement. But it’s good news!

  3. 5

    Anonymous says

    keep in mind there is a price to pay to get this insurance which will increase your closing cost and monthly payments.