If you are looking to buy a condo, a recent change to FHA loan requirements may just have made your condo purchase more difficult.

In order to get a FHA/VA loan on a condo, the condo development must be FHA approved. If the development has not been approved, it needs to go through a certification process, which checks various criteria such as: must be 50 percent owner occupied, less than 25 percent commercial use, no more than 10% owned by one investor etc. This certification process takes anywhere in the region of 3 weeks to 3 months once the paperwork has been received.

What’s the problem you may ask, surely most the condo developments must have already been approved. Well yes they were, but a recent change means that any development that has not been approved in the last two years will have to reapply for certification. This means that most developments, with maybe the exception of some of the newer ones, will not be able use FHA loans until they have been recertified, which may take some time depending upon the efficiency of the HOA (HOA needs to provide numbers on owner occupancy etc.) and how long it takes the FHA to approve the certification.

This is not just a Salt Lake City Condo Market problem, all condo developments in the U.S. have had their approval status expire.

The only way around this issue is for the buyer to obtain a conventional loan instead of a FHA/VA loan, thus circumventing the approval process. The problem with this is that conventional loans require stricter credit qualifying criteria, and the down payment requirements are greater.

Read this Buying a Condo Just Became More Difficult article on our real estate blog.

Prices have been announced for the downtown Salt Lake City Creek Condo developments and as you may expect they are expensive. Prices range from $500 to $800 per square foot. To put this in perspective in the first quarter 2009, just 5 condos were sold in the entire downtown area, with an average price per square foot of just $205. That puts the starting price of a City Creek Condo at approximately 150 percent more than the current cost of a downtown condo.

Now don’t get me wrong the City Creek development will be a quality development and probably deserves to be sold at a premium to other condos, but given the current state of the real estate market, it does not seem how such a high premium can be justified.

There are currently two options available if you want to purchase a condo in the City Creek development, The Regent and Richards Court (which in turn is split into Richards Court East and West). Richards Court is located at the gateway between Temple Square and City Creek, the development is comprised of two ten story buildings flanking a tree lined promenade through which flows City Creek. The Regent is a 20 story ultra modern looking building located at the south end of the City Creek Center project on 100 South.