California Condos Will Soon Have to Disclose FHA or VA Loan Approvals to Purchasers

If you’re looking to buy a condo in California in the near future, you’ll soon be informed whether or not the condo association is approved for Federal Housing Administration (FHA) or Veterans Administration (VA) mortgages.

As of July, changes to pre-sale disclosures in the Golden State will come into effect, and will obligate all condos to make this information known to buyers.


These changes were a long time coming, given the key role that FHA- and VA-backed mortgages played after the housing crisis in 2008 and beyond.

Come summertime, condo associations will need to be approved before any FHA and VA mortgages are issued to buyers thanks to bill AB 596 that was passed last year by California legislature. Having such approval will help condo unit owners avoid losing sales should buyers not being capable of securing a mortgage.

Before 2009, buyers would work directly with mortgage brokers to see if they qualify for FHA- or VA-backed mortgages. Following the housing debacle eight years ago, condo boards are now responsible for obtaining approval for these types of mortgage packages before they can be issued to a buyer.   

In order to be approved, condo associations need to provide documentation that proves it has a healthy budget and adequate reserves, a low assessment delinquency rate, specific insurance requirements, and a minimum 50% owner occupancy rate.

FHA mortgage approvals expire every two years, after which a recertification process is required. If a condominium development is unable to meet FHA or VA approval guidelines at some point, it might not be approved for recertification.

The intention of bill AB 596 is to make sure that condo owners and prospective buyers are fully aware of the perks that come along with approval of FHA or VA loans. Perhaps the most beneficial aspect of the availability of FHA or VA mortgages is the fact that it significantly boosts the marketability of the units in the development.

For this reason alone, condo associations should start making plans to apply.