More condominium projects are expected to gain eligibility for FHA financing under new guidelines issued by the Federal Housing Administration this month. The revised guidelines, set to take effect Oct. 19, are expected to qualify 20,000 to 60,000 more condo units annually for government-insured FHA loans.
FHA loans, which require a 3.5% down payment and have generally looser credit requirements than conventional loans, are popular with first-time home buyers. Condos, too, are popular with first-time buyers because they often offer an affordable price to enter the housing market and require less home maintenance. Yet only about 6.5% of all condo projects in the country are approved for FHA financing because of restrictive policies in place for more than a decade.
Highlights of the new guidelines that should boost condo sales:
· Spot approvals: If an entire condo building wasn’t on the approved FHA list, it was nearly impossible for an individual buyer to obtain FHA financing in the past. The new guidelines allow an individual unit to be approved for FHA financing in a building of 10 or more units, as long as no more than 10% of the units in the building have an FHA-insured loan. In smaller buildings, with less than 10 units, no more than two units can have an FHA-insured loan.
· Mixed–use developments: The amount of commercial space allowed in a condo has been increased, which means more condo units in mixed-use developments will be eligible for FHA loans.
· Certifications: The length of time a certification lasts has been extended from two years to three years, and recertification has been streamlined.
· Owner/occupant ratios: The required ratio of owners vs. renters has been dropped from 50% to 35% to be eligible for an FHA approval.
· FHA loans: Up to 75% of all units in a condo project can now have an FHA loan.
Through July 31 of this year condo sales in Wallingford comprise 9.5% of total sales. The average selling price of the 14 condos sold was $126,561.
These changes take effect in October and will make FHA financing easier for condominium buyers.
Wallingford PA Real Estate – Wallingford,, PA 19086