The U.S. Department of Housing and Urban Development released updated guidelines on FHA-insured condominium financing.
The new rules allow more buyers to obtain low down-payment mortgages on affordable housing options.
Specifically, the new rules will:
• Extend FHA certifications on condo developments from two years to three years, reducing the compliance burden on condo boards.
• Allow for single-unit mortgage approvals—often known as spot approvals—which will enable FHA insurance of individual condo units, even if the property does not have FHA approval.
• Secure additional flexibility in the ratio of investors to owner-occupants allowed for FHA financing in a condo building.
In 2009, FHA had restricted its condo approval process, which limited the number of properties that could receive FHA loans. In 2016, it moved to lift several of those restrictions, but the proposed rules were never finalized. The guidance to be issued this week is sparking hope in the real estate industry for a turnaround in condo sales.
“This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people,” said NAR President John Smaby.
The guidelines go into effect in mid-October, 60 days from publication.
You may download the new rules at the Federal Register (Page 41846) by clicking HERE.