A new FHA policy, going into effect in October will make purchasing a condominium a feasible option for those who aren’t able to secure a conventional home loan!
Analysis: FHA Condo Rules Will Give Affordability a Boost
Are you interested in purchasing a condo but have been unable to do so due to FHA condo rules? Big news! A recent change in FHA policy is making condominiums accessible for all buyers!
You’ve heard of an FHA loan, but do you know what it is? An FHA loan is a government-backed mortgage. It makes homeownership possible for those who are not able to secure a home mortgage. An FHA loan only requires a 3.5 percent down payment. Compared to conventional loans, buyers with lower credit scores are typically approved. Did you know that FHA insures home loans for 84 percent of first-time homebuyers? That’s right!
The increase in home prices nationwide make it difficult for entry-level home buyers to purchase a home. It is also extremely difficult for condominium buyers to purchase a home using FHA financing. However, there is great news! FHA recently made big changes to their condo purchasing policy. These changes will make it feasible for buyers to purchase condominiums using an FHA loan.
The old FHA rules dictate that only cash buyers and conventional buyers are eligible to use FHA financing to purchase condominiums. Currently, only 6.5 percent of the 150,000 condominium projects in the U.S. are approved for FHA’s mortgage insurance programs. Officials say the new policy will go into effect on October 15, 2019. It will open up somewhere between 20,000 and 60,000 condo units to FHA-backed financing each year.
What Does This Mean For the Condo Market?
Across the nation, adding that many condos to the FHA buying inventory will have many benefits. First, it will increase the number of condominium sales. This increase in sales could give competition to lower-priced homes. This will, in turn, prevent the overheating of the lower-priced housing inventory.
This is great news for those who want to purchase a condominium with the help of FHA financing! I am happy to answer any and all questions you may have about condominiums, FHA financing, and purchasing your next home! Until next time, I’m Gitta! Happy condominium hunting!