Condo Project Approvals and Their Significance to Obtaining Financing

A condo project approval will be required if you're looking to obtain financing in your particular project that you either own a property at, are looking to develop/build, and or purchase at.

These approvals can affect your ability to obtain conventional, FHA, and or VA (veterans) financing. Each approval has their specific requirements. Some general requirements are:

- 50% or more owner occupants

- no more than 10% of the ownership of the complex is by a single entity or person

- HOA delinquency is less than 15%

- no substantial litigation which may impact the home owners association's ability to continue operations

- etc

Additionally each type of project approval has their own set of documentation, time frames, presale requirements (if developing), and additional nuances with regards to financing.

Its crucial to tailor the approval time frame with your time frame in a systematic way so that you close on time and are able to either move into your unit, rent out your unit, or pay back your construction financing with the sale of your receivables if you're developing/building.

The project approval can affect your liquidity if you had to sell quickly and no financing was available the price may have to be lowered to attract a smaller pool of qualified cash and private/hard money buyers.

Obtaining funds from your property via a cash out refinance may be severely affected as well if the project was approved but recently it may have loss it's approval status. Some portfolio lenders however will be a bit looser in terms of lending in a condo project with out project approvals depending on your particular circumstances.