Higher deductible killed conventional and FHA - Now what?

[Tom LaRocque]

My condo is an HOA that is suddenly non-warrantable for conventional financing. To save money, management raised the wind and hail insurance deductible from 5 to 10 percent. That exceeds the 5 percent max allowed by Fannie Mae, at least in Colorado.

I've been told the higher deductible also effectively killed FHA financing. (This HOA was not FHA approved, but now even single-unit "spot approval" is no longer possible.)

Who has dealt with this misfortune anywhere else?

Where can I see (in writing) the max allowable deductibles - both for conventional and FHA? I've heard different stories.

Is FHA truly out of the question now? Or could someone to get FHA spot approval?

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[Patrick Roberts]

Here is a link to the FNMA guidebook. They're publicly available via a quick google search. Also, keep in mind that some lender may have overlays that are more restrictive than the FNMA/HUD guidelines, meaning the lender's internal condo guidelines require more than FNMA/HUD. This typically comes into play with big banks (Chase, etc) who are buying the loans to place them on their balance sheet. I know for a fact that Chase has an internal condo approval process for all loans being sold/brokered to them.

https://selling-guide.fanniemae.com/sel/b7-3-03/master-prope...

For FHA, the guidelines are FHA 4000.1.

Also, this: https://www.hud.gov/press/press_releases_media_advisories/hu...

Long story short, condos are becoming increasingly difficult to finance. I just had to fight tooth and nail to close a VA condo purchase for a client with a POA that was actually fairly well run, relatively speaking. As insurance woes grow over the next couple of years, I dont see this improving.