What would make a condo not FHA approved?

Question

We were looking into a condo and its not FHA approved. Why would it not be FHA approved? Could it be the size of the place?

Answer 1

FHA doesn't pre-approve properties for financing.  They are probably referring to how the association or the property ownership itself is set up and how that wouldn't be acceptable to FHA.

Approval is based on PROPERTY TYPE.

FHA will not approve loans condo-hotels, condos where more than a certain percentage is sold AND owned by investors (this is a bad deal for anyone), or a new development where the HOA has not been fully created as of yet or where the developer and not the residents is in control.

Answer 2

One big thing is Rental-to-owner-occupied ratio.  I think for FHA it is like 40%.  Above that they won't finance it.

Look for another condo association, or, try a conventional loan.