Last spring I had a buyer fall hard for a two-bedroom in Mission Valley. Good light, a short walk to the trolley, priced right around $520,000. She had an FHA pre-approval and 3.5% down ready to go. Then we checked the complex, and it wasn't FHA approved. That was the end of it.
Nobody warns first-time buyers about this one. An FHA loan doesn't just approve you. It has to approve the building too. If the HOA isn't on HUD's approved list, your low-down-payment loan can't be used there, no matter how strong your credit is.
Here's the part that surprises people. Plenty of solid, well-kept complexes in San Diego aren't on that list. It isn't because anything is wrong with them. FHA approval expires, and renewing it is paperwork a volunteer HOA board has to go chase. A lot of boards in older Clairemont and Mission Valley complexes just let it lapse. The building is fine. The paperwork isn't.
So before you tour a single condo, do this:
- Search the complex on HUD's condo approval lookup (it's free, and it takes about two minutes). - If it's expired or missing, ask your lender about a single-unit approval before you get attached.
That second option exists, but it's slower and not every lender will do it. I wouldn't build your whole search around it.
My honest opinion? A lot of agents skip this step until an offer is accepted, and I think that's backwards. You end up with a buyer who's already emotionally moved in, and then the lender kills the deal in week two. I'd rather you know on Saturday morning, before the open house, than on day twelve of escrow.
FHA isn't the only thing to check, either. While you're looking at the HOA, ask how many units are rented out and whether anyone is behind on dues. High rental ratios and a lot of owners in arrears can create problems with conventional loans too, just less often.
None of this means you should avoid condos. For a lot of first-time buyers in San Diego, a condo is the realistic way in, especially if you want to live closer to the coast or downtown than a detached house allows. It just means the building is part of your loan approval, not only the unit.
If you've got a list of complexes you like, send it to me. I'll run every one of them before you fall for any of them.