FHA Condo Loans for Self-Employed Borrowers
But FHA home loan rules say self-employed borrowers are welcome to apply; for best results you may wish to time the condo loan application for when you have at least two years of self-employment on the clock and can show that your work is upwardly mobile rather than struggling or losing money.
That is not to say that a self-employed person cannot qualify for a mortgage loan to buy a condo unit even in the beginnings of building up a client base or business, but the lender will look more favorably on an application that has evidence that the self employment is reliable and likely to continue.
What do you need to know as a self-employed person looking for an FHA condo loan?
Condo loans require the condo project to be on or added to the FHA approved list. The procedures for this may depend on whether the condo project is finished or not, how long the project has been complete, and whether or not the condo owner’s association agreements include restrictive rules such as a right of first refusal which gives the condo association the ability to approve or deny the sale or transfer of the condo unit.
FHA home loans cannot be approved for condo projects that require an FHA borrower to agree to the right of first refusal. There may be other restrictive clauses that create issues for loan approval, or there may be none at all depending on the project and circumstances of the mortgage loan.
FHA condo loans allow financially qualified borrowers to apply for maximum financing of 96.5% and a 3.5% down payment. The down payment requirement is higher for borrowers with borderline or marginal credit scores; FHA loan minimums permit maximum financing and the lowest down payment for those with FICO scores 580 or higher.
However, you will need to see if your FHA lender requires higher FICO scores for maximum financing. Some will, some may have additional requirements above and beyond FHA loan minimum guidelines.
Down payment rules in this area apply regardless of the size or location of the condo unit. Zoning issues will be handled at the local level; FHA loan rules do not override or nullify local requirements including building code, appraisal rules, and other issues.
Not all participating lenders offer FHA condo loans, but many do. Your status as a self employed borrower will require you to furnish additional documentation including tax paperwork, profit-and-loss statements in some cases, and other records that show the progress of your business and how consistent your income is and may likely be in the near future.
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