We all know that Hawaii is full of unique properties. Site condos and ohana units are two of the property types that cause a lot of confusion. The following paragraphs explain what these two types of properties are and how they are treated for FHA, VA and conventional loans.
Site Condos
Site condos often cause confusion because they look and feel just like a single family home, but it is really a part of a condominium complex. It is usually one of several detached homes on a single lot. The easiest way to determine whether a home is a site condo is to look at its “TMK” or Tax Map Key number. If the last four digits are anything but ‘0000’ it’s a condo. The homes typically share ownership of certain common areas, but the structure belongs to the homeowner. It may be insured as an individual unit or as part of a master policy. For many lenders, all the units within the condo must actually be detached from each other one. If any unit is attached, any home in the complex may be considered attached. Exceptions may be made, but rates may be higher.
Loan Types and Treatment of Site Condos
Fannie Mae, Freddie Mac & FHA treat site condos the same as single family residences.
For the VA loan program, all condos must be approved by the VA, site condo or not. See our post related to VA condo approval procedures. They will be the same for site condos as any other VA non-approved condo.
Ohana Units
An “ʻohana unit” also known as an “accessory” or “mother-in-law” unit is a part of a house or a separate structure on the same lot that may contain a relative but which may not legally be rented to the general public. The ohana unit may not have a complete kitchen and is not a legal 2 unit property.
Loan Types and Treatment of Ohana Units
Fannie Mae, Freddie Mac, FHA and VA all allow ohana units, but rental income can not be used for qualifying. If the unit is legal non-conforming and can not be rebuilt, the area may not be valued. For VA loans, the property must be permitted completely.
We hope that helps clear up some of the confusion that may exist about these properties.
When we first launched our VA Condo Eligiblity Check tool almost 3 years ago, it was out of sheer frustration that the official VA condo check tool was somewhat ‘clunky’ and at times, very difficult to use. We thought that there should be an easier and more efficient way to access this important information, so we decided to build our own tool that using the same information provided by VA.
The result was great – we’ve noticed that our VA Condo Eligibility Check Tool page is our most visited webpage outside of our homepage. Obviously Veterans and Real Estate agents find the value in our tool – which is exactly why we built it.
What we found though is that in order to make sure our data is accurate, we had to manually scrub and update our database of condos with the VA’s list. This proved to be a very time-intensive task and we’ve noticed that we couldn’t get our information updated as often as we wanted.
The Solution
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When shopping for the perfect home to buy, it is always recommended to get prequalified by a lender first so that you don’t waste your time looking at properties that may not be in your price range. In the same token, when shopping for a condo and you know that you will be getting financing through a VA loan – you must first check to see if the particular condominium you are interested in is eligible for VA financing.
Even though most condos in Hawaii are VA eligible, you want to double check ahead of time. The last thing you want to do is fall in love with a particular condominium only to find out after the fact, that this condominium is not on the VA approved condo list.
HawaiiVALoans.com makes checking the VA eligibility easy by introducing the Condo Eligibility Check Tool. With this particular tool, you just type the first few letters of the condo name and the suggestion tool will automatically return the most relevant results. Once you see the condo name you are searching for, click the name and just like that – you can find out if the condo is approved for VA financing or not.
Now if you cannot find the condo name in the search box, not to worry. It just means that this particular condo has yet to be reviewed by the VA Regional office here in Hawaii. Feel free to contact us if there is condo that you would like to be added to the VA approved condo list here in Hawaii.
We all know that Hawaii is full of unique properties. Site condos and ohana units are two of the property types that cause a lot of confusion. The following paragraphs explain what these two types of properties are and how they are treated for FHA, VA and conventional loans.
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