Strategies for FHA Eligible Properties

The Federal Housing Administration is a national program that helps prospective homebuyers buy their homes by insuring approved mortgages by FHA-approved lenders. If you are looking to purchase a home, be aware that the FHA has particular guidelines and restrictions on what constitutes an FHA-approved home, and it is important to be aware of the basics when preparing to buy and procure an FHA-approved loan.

Basic Eligible Properties

FHA will back loans for many distinct types of homes, such as primary residences using a limit of four components, condos, manufactured homes, precut homes, modular homes, rural properties and projected urban developments.

Properties with Four or Three Units

Typically, three- and – four-unit properties are bought to lease out. To qualify for FHA financing of your loan, your net rental income should pay for your mortgage payment. If you do not have tenants yet, an appraiser may ascertain the possible income based on an estimate of what the empty units will fetch on the open market. You have to be eligible for the loan based on income and credit requirements, and you must have 3 weeks’ worth of savings available to handle mortgage payments. That money has to be your very own.

Manufactured Homes

FHA will back a loan for a manufactured home, either single or double-wide, however there are many requirements. The home has to be constructed after June 15, 1976, and its structure has to be approved by the Federal Manufactured Home Construction and Safety Standards. The living room cannot be less than 400 square foot. The home has to be categorized as real estate and the land has to be owned. Any mortgage FHA backs must provide to your home and the land it is on. It cannot be on wheels, should be repaired into a slab base, connected to utilities and must not have been moved from or lived at at another site.

Rural Property

FHA will back loans for rural property, but there’s a limit to the total amount of acreage that may be included when determining the significance of loan purposes. FHA will only back the value of the initial 10 acres of the house, and those 10 acres should incorporate the home.

Condos

FHA will back loans for condos, but only for components at complexes that are accepted by FHA, which has a clearinghouse that manages approval. The site permits you to search by state, condo name or zip code to find FHA-eligible complexes. To become FHA qualified, a condominium complex must have at least 51 percent owner occupancy and at least 90 percent earnings of all units. Additionally, no single individual or entity can own over 10 percent of the components. The complex cannot be involved in any legal activity when you employ, and the homeowners’ association must have both a book plan and book fund that’s not linked to its normal operating expenses.

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