The U.S. Department of Housing and Urban Development recently revised its condominium loan policies to allow consumers greater access to mortgage loans that are federally guaranteed through the Federal Housing Administration(FHA). After Oct. 15, 2019, as many as 60,000 additional condo units will meet FHA-certification, making them eligible for buyers to purchase with an FHA loan.
The new guidelines will extend project certifications from two years to three, allow for single-unit mortgage approvals, allow a higher owner-occupant vs. renter occupancy ratio, and increase the number of units eligible to be purchased with FHA loans in a single project.
The FHA certifies eligibility for both condo projects and individual units, but according to the National Association of REALTORS, only 17,792 FHA condo loans were originated in the past year, out of approximately 8.7 million condo units nationwide.
The new relaxed guidelines are a significant improvement as condos are often more suitable and affordable to many singles, couples and small families who wish to take advantage of easier qualification, low-down-payment FHA loans - particularly first-time buyers.
Any impediment to buying a property can impact its desirability and market value. With approximately 84% of homebuyers purchasing a condo for the first time, the relaxed rules will promote more “affordable and sustainable homeownership, especially for credit-worthy first-time buyers.” The result should also make condos more marketable and easier to resell since the pool of available buyers and loans will be larger.
Contact your Berkshire Hathaway HomeServices network professional for more information.