In March the FHA did away with spot approvals in condo buildings. They now require the whole building to be FHA approved before an FHA buyer can purchase in that building. Since there are very few condo buildings in the downtown area that are FHA approved, sales have virtually stopped in some buildings. FHA financing allows lower credit scores and lower down payments which helps many people, especially 1st time home buyers qualify for a mortgage. At least once a day I get a phone call asking if a particular listing I have is in an FHA building, if it is not, they move on.

Today’s sellers need as many options as possible. The stricter Fannie Mae & Freddie Mac guidelines have eliminated many buyers that do not have a 10% down payment, or the necessary credit score.

FHA

What I see happening now in these buildings that are not FHA approved is the unit owners owners, since they cannot sell, are opting to rent their homes. This is an OK option until the building exceeds the Fannie Mae/Freddie Mac guidelines of 80% owner occupied. Once the building becomes 60-70% owner occupied, the only option for people that want to buy in that building is FHA insured loans. It is a bit of a Catch-22, but this can be avoided by having the building FHA approved right away.

Becoming FHA approved is not hard, it does require some paperwork but there are many mortgage companies that will help with the process.
Here is a link where you can search and see if your building is FHA approved

Here are a few downtown Chicago buildings that are approved:
Haberdasher Square Lofts 728 W. Jackson
Metropolitan Place 130 S. Canal
If your building would like to become FHA Approved, please contact us and we can put you in touch with several resources that will help you with the process.