Financing – Does the condo qualify for FHA financing
Not every condo can be purchased using an FHA mortgage. The FHA must approve a condo complex in order for the units to qualify for FHA financing. The FHA looks at things like the ratio of owner-occupied to rented units and the financial stability of the HOA when approving a condo complex. If the complex does not qualify, you will have to consider conventional financing or a cash purchase, or look for an FHA qualified complex to purchase in.
One of the things the FHA looks at are how much reserves the HOA has. This is the money the Home Owners Association sets aside for future capital expenses like new roofs, paving the parking lot, etc. You will want to know this as well. If reserves are insufficient for future maintenance work, you may be faced with a large, unexpected contribution when such work becomes necessary.
One thing you’ll want to know is what the HOA fees cover. Most of the time the HOA fees cover things like exterior maintenance (by contributing to the reserves) and maintenance of the parking lots and grounds. If the community has amenities the HOA fees will also cover maintenance of these. But sometimes HOA fees will cover certain utilities like water or heat, and in rare instances even things like taxes. Before you turn down a unit because the fees or too high, find out what they cover, it might not be that bad when you consider what is included.
Condominium communities often offer a number of amenities, that is one advantage of condo living. Swimming pools and tennis courts are common. More recently communities have included club rooms, rooftop gardens and similar areas that can be reserved or rented for entertaining. Some communities also host gatherings, or sponsor clubs and other social opportunities for residents.
Some condos have their own driveway and garage. Others offer a specific number of reserved parking spaces for each unit. However, some merely have a parking lot with spaces on a first-come first-served basis. Guest parking spots are often limited, making entertaining difficult. Communities may also restrict the types of vehicles that can be parked. They might restrict motorcycles or trailers. Be sure you know what you will be able to park before you purchase.
Storage can be quite limited in many condo units. Find out if there are storage areas elsewhere in the building, such as in the basement. If storage is insufficient you may need to plan to purchase space in a self-serve storage facility.