With
FHA loans playing such a big part in the markets right now it is no wonder that everyone wants to make more of them and ensure that more properties are eligble.
So, times are changing!
With Condominiums,"
FHA approved" may become the most popular condominium amenity in the United States soon, thanks to the new guidelines established by the FHA to take effect February 1, 2010.
These guidelines could really
boost condo sales as they address two important aspects of condo sales: down payments and the financial integrity of condominium associations.
"FHA approved" right now means a 3.5% down payment. Starting early next year, "FHA approved" will mean 3.5% down plus a financially stable association approved by your lender. These new guidelines really ensure that condo associations are managing their affairs well to minimize the risk to borrowers and lenders.
First time home buyers are generally thought of as the primary market for FHA financing. There is something to that, but in today’s world, many who bought their first homes years ago and lost them during this recession will appreciate the FHA financing availability even more than those coming out of rentals.
To qualify for FHA mortgages, associations must:
- Maintain a reserve equal to 10 percent of the annual budget
- Make sure no more than 15 percent of its owners are more than 30 days late with condominium fees
- Allow lenders to review their financials and insurance policies
- No more than 10% of the units may be held by a single investor
- Fidelity insurance must be obtained for 20+ unit projects
- No more than 25 percent of space allowed for commercial use.
For a new condominium to qualify for FHA financing the following guidelines apply:
Effective February 1, 2010:
- 50 percent of the total units must be presold before FHA financing is approved
- 50 percent of the total units must be owner occupied
- No more than 10% of units may be held by a single investor
- Unit owners must obtain individual HO-6 insurance policies if the master policy doesn’t cover interiors
Recertification is required every two years. Projects that received approval between October 1, 2008 and December 7, 2009 will be "grandfathered" and will have to follow the new guidelines’ recertification process .
The marketing benefits are significant with this move as more buyers will enter the market, more inventory will be available as more developments are approved and lenders will be keener to lend on condos!
Exciting news for
Condo buyers here in Ann Arbor and across the country!
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