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FHA Condo Loans

I was recently approved for an FHA loan on a home. The mortgage broker told me that the down payment was going to be 3.5% min. I decided to expand my home search to condos (can buy in better location than a home in my price range) and asked my mortgage broker if the lending requirements differ. Per the broker, she told me that I would need a minimum 25% down payment to be approved for an FHA condo loan. Is this correct? The reason I ask is that I was close to making an offer on a place until she told me this. I wanted to find out if was in fact true, or if she was just trying to get me to steer clear of condos for some odd reason. The difference in down payment requirements (21.5%) seems rather high, and hardly believable. Can anyone offer insight on this? On a separate but related note, she also told me that the first-time homebuyer tax credit can't be applied to down/closing costs. Yet my real state agent says that it can be applied. I am also wondering if she is incorrect with this statement as well??? by pam4466 from Orange, California. Jan 13th 2011 Reply


Brady Smedsrud (BradySmedsrud)
#3 ranked lender in Montana - 17 contributions

Yes, she is wrong. An FHA condo loan has the same down payment requirements as an FHA home loan which is 3.5%. Your tax credit can be applied to closing costs however you can not apply it to your 3.5% down payment. Closing costs may be origination charges, title fees, recording fees, underwriting fees, ect...I would be happy to help you out with this loan if you are doubting your current loan officer. We work with many different lenders which allows us to seek out the best available service for each individuals current situation.

Jan 13th 2011
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Joe Hinshaw (joe@turnkeymm.com)
#382 ranked lender in California - 1 contribution

Thanks for the question. No that is not correct. You are still able to finance 96.5% on a Condo with FHA. You do however want to make sure the Condo Project is FHA approved. Any gov't tax credits cannot be applied to the closing cost or down. Call me if you have any additional questions.Joe HinshawVP Turnkey Mortgage Management949-689-3124joe@turnkeymm.comwww.jhinshaw.com

Jan 13th 2011
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