Sue Fox, @Properties. Direct 773.816.1788
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- FHA loans
- Market conditions
- Tax credits
Real Estate radio
It’s a tricky time to be using FHA to buy a condo. Most Chicago condo buildings are NOT already FHA-approved, and the Federal Housing Administration recently changed its rules to eliminate “spot” approvals. This means that the whole condo building must be approved before FHA will insure any mortgages there, a process that now takes about a month.
Many buyers are attracted to FHA loans because they require low down payments (just 3.5%). But after a few weeks out looking at condos, people often tire of the FHA game, because (at the moment) it is severely limiting which buildings they can buy in.
But there is an alternative! If you have good credit and can come up with a slightly higher down payment, several Chicago lenders — including Guaranteed Rate and Wintrust Mortgage — are now doing condo loans with just 5% down. Northern Trust is also offering low down payment loans for people with good credit, although that program has some income restrictions.
Eventually, once many condo associations complete the paperwork to become FHA-approved, there will be a broader selection of Chicago condos for FHA buyers. But at the moment, with thousands of first-time buyers trying to close in time to claim their $8,000 tax credit, trying to find an FHA-approved condo in a hurry can be challenging.
Why limit your choices? If you can scrape together a bit more cash, you may be able to qualify for a 5% down mortgage that will work for a much wider selection of properties.
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