Spot Loan

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DEFINITION of 'Spot Loan'

A spot loan is a type of mortgage loan made for a borrower to purchase a single unit in a multi-unit building, such as a condo complex. Lenders sometimes require that they approve the entire building in order to approve a loan for an unit within the building. However, some lenders will make a spot loan when only the unit to be purchased has been approved by the lender, as long as the building meets certain broader requirements.

BREAKING DOWN 'Spot Loan'

Spot loans are frequently associated with the FHA Spot Loan program. This program allowed condo buyers to obtain an FHA-insured loan on an individual unit in a building that had not been FHA approved. This program allowed borrowers to get loans on condos when they might not otherwise have qualified.

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RELATED FAQS
  1. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
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    Even though it is normally assumed most people know their home equity, many are still confused about the topic. It is an ... Read Full Answer >>
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    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  4. In what instances does a business use closed end credit?

    The most common types of closed-end credit used by both businesses and individuals are mortgages and auto loans. Businesses ... Read Full Answer >>
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    Delinquency occurs when borrowers fail to make payments on their loans. All loan borrowers should do their best to avoid ... Read Full Answer >>

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