Q:

What is an FHA approved condo?

A:

Quick Answer

An FHA, or Federal Housing Administration-approved condominium qualifies for a mortgage insured by the United States Department of Housing and Urban Development, or HUD. FHA is a government agency within HUD. The loans are made through lenders approved by HUD and offer a lower interest rate on the mortgage.

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Full Answer

To find an FHA approved condo, a search can be conducted on the HUD website designed specifically for locating a condo anywhere in the U.S. The page allows a search by location or the name of the project. The properties are for sale through the real estate companies, not from FHA. The search is designed to help buyers locate a qualified FHA approved condominium easily.

Mortgage companies that have been approved by HUD to offer FHA loans can offer lower interest rates to borrowers because the FHA will pay the claim to the lender if the borrower defaults in repayment. With less risk to the lender, certain qualifications for loans can be relaxed and lenders can offer loans with less stringent rules.

FHA loans also offer borrowers the option to make a lower down payment. The loans must match certain requirements set by the FHA to qualify for mortgage insurance, which must be purchased by the borrower.

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