The opportunity to purchase an condo or tonwhome in Los Angeles County with an FHA loan is as hard as finding a needle in a haystack. It makes find your first home in Los Angeles difficult because the best option for smart people starting with a smaller down payment and lower budget means they have so few options.
This all stems from each condo community or townhome complex taking time to apply and be approved by the Department of Housing and Urban Development (HUD). Approval lasts four years and enables the whole complex to sell to FHA approved buyers.
FHA is mortgage loan insured by the Federal Housing Administration (thus FHA). The federal government encourages loans for FHA-approved lenders, who are private banks, in order to reduce the bank’s risk of loss if the borrower defaults on their mortgage payments. One of the best features of an FHA loan is the 3.5% down payment on a house, which allows buyers the ability to save less and get into real estate sooner.
I have a buyer right now who would like a condo with a remodeled kitchen near the beach or in the San Fernando Valley, with a budget of $300,000 or under with an FHA loan. However, we have looked all over for a condo that is FHA approved and as of last week, I found 3 in the San Fernando Valley. All of them had multiple offers and were already over the asking price.
Before I go out with my client to see condos, I check the HUD website (https://entp.hud.gov/idapp/html/condlook.cfm). Plus, I have my client check when he looks for property if it is approved on this site. To make matters more difficult, this site only operations during unposted business hours, Monday through Friday. For example, in Van Nuys, a valley city west of Glendale, there are 2 approved condo/townhome complexes with a valid FHA approved. My client can buy in the Parkwood Van Nuys Homeowners on Sherman Way or Flagstone Chateax on Fulton.
This is an example of how challenging it so for an FHA approved condo or townhome complex in any price range. It is pushing FHA approved buyers into single family homes, which does raise the price point a little. Single Family homes are usually higher in total cost.
I’d love to see an ability to approve more condo and townhome complexes because FHA is one of the best loan programs to help with lowering the closing costs, allows buyers to get more for their money. Plus, anyone who wants to buy a home with less money down, is smart about their money.