Thursday, August 15, 2019

Great news from FHA re condo rules

FHA announced that it is relaxing some of its condo rules to make condo loans easier to get.  This is huge and ought to improve affordability as well.  As it exists, condo complexes need to be approved by FHA in order for lenders to make FHA loans on them.  FHA loans differ from conventional loans in that the down payment and qualifying credit scores can be lower.  That makes these loans perfect for first-time buyers.  Here's the catch -- the approvals include lots of Byzantine rules and restrictions, and home owners associations have to pay to be FHA-approved.  This effectively cuts out many would-be buyers, who need to rely on FHA mortgages to get a mortgage at all.

Specifically, the new guidance extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The rule will go into effect in mid-October – 60 days from publication. HUD believes the changes will extend critical benefits to aspiring homeowners and confirm the agency is properly serving the public.

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