It’s Here: Mortgage Rule Opens Door to Thousands of Condos
Buyers found a condo they loved only to find that it doesn’t qualify for a federally backed mortgage? Try again tomorrow. New rules that open more condos and complexes to FHA loans go into effect on Oct. 15 – a break in condo-heavy Fla. for first-time buyers.
WASHINGTON – First-time homebuyers often opt for a condo, but rules for Federal Housing Administration (FHA) loans banned many units and complexes in Florida from participating.
However, that changes on Tuesday, Oct. 15, when updated FHA rules go into effect. The new FHA condominium approval regulation – and a new Condominium Project Approval section of the Single Family Housing Policy Handbook – are a comprehensive revision to FHA condominium project approval policy.
Of special interest in Florida, which has a lot of condo units, is a new policy that makes some individual condominium units eligible for FHA mortgage insurance even if the condominium project isn’t FHA approved.
While the U.S. has more than 150,000 condominium projects, only 6.5% are currently approved to participate in FHA’s mortgage insurance programs, and FHA estimates that 20,000 to 60,000 more condo units could be eligible for FHA-insured financing every year.
The change is notably good for first-time buyers – 84% of FHA-backed condo buyers are first-timers.
“Florida is ground zero when it comes to condominium sales but these markets have been impacted by certain federal rules,” said 2019 Florida Realtors President Eric Sain, a Realtor and district sales manager with Illustrated Properties in Palm Beach, when the updated rule was published in the Federal Register. “The changes being proposed by HUD will go a long way in allowing flexibility in these markets and help more hard-working Americans achieve the dream of homeownership.”
National Association of Realtors® (NAR) President John Smaby said the FHA update “culminates years of collaboration between HUD and the National Association of Realtors (NAR).”
The new rule:
Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing
Extends the recertification requirement for approved condominium projects from two to three years
Allows more mixed-use projects to be eligible for FHA insurance
“Florida Realtors has been working with NAR on this matter for some time now, and we are excited to see the results of this work,” said Sain. “Many congratulations to NAR for staying diligent on the issue and communicating with members at HUD to explain the problem and find sensible solutions.”
The complete HUD regulation on FHA loans is posted online, and NAR produced a video that provides an overview of the changes.
source: Florida Realtors