The Federal Housing Administration will now allow individual unit approval and is taking other steps to loosen requirements that make these properties eligible for FHA financing.
These new rules will open many doors to buyers who have been waiting on the sidelines, waiting to become homeowners, waiting to share in the American Dream.
Here are the revised guidelines, which take effect Oct. 15, 2019:
An individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured.
For units in buildings with fewer than 10 units, no more than two units can have FHA insurance.
The FHA is also extending the re-certification deadline for approved condo projects from two to three years, and it will insure more mixed-use projects, or those with more commercial space, to be eligible, stating that approved projects can now have up to 35% of their square footage dedicated to non-residential use.
The agency also loosened restrictions on owner-occupancy rules, stating that eligible condo projects can now be just 50% owner-occupied.
It also said it will insure up to 50% of units in any given project.
The FHA said it expects the updated guidelines to qualify an estimated 20,000 to 60,000 more condo units per year for financing. Currently, of the more than 150,000 condo projects across the country, only 6.5% are approved for FHA financing.
“This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership and are more likely to enter the market with the purchase of a condominium.”
Brian Montgomery, HUD Acting Deputy Secretary & FHA Commissioner
Specific changes regarding condo approvals can be viewed in an updated version of FHA’s Single Family Handbook, found here.