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It Is About To Get Easier To Buy A Condominium
FHA Condominium Financing Rules Easing
Condominiums are among the most affordable homeownership options for first-time homebuyers, but a lack of financing options has stood in the way of many buyers.
FHA loans are many first-time and low income buyers’ most attractive financing option, with down payments as low 3.5% and easier credit score requirements. Beginning in 2010, the Federal Housing Administration introduced much tighter eligibility requirements and also began requiring condominium communities to re-qualify every two years.
Today less than half the condominium communities in Montgomery County qualify for FHA financing.
For a list of FHA approved condominiums click here:
(Note: This website is often not available on weekends or after 10:00 p.m.)
Changes are now underway to once again make FHA financing more available to condominium buyers and sellers. FHA announced in November 2015 that they were immediately easing some restrictions.
The new rule:
Modifies the requirements for condominium project recertification,
Revises the calculation of FHA's required owner-occupancy percentage,
Expands eligible condominium project insurance coverages.
But barriers to safe, affordable mortgage credit for condos still exist, and now Congress has taken up the issue. Last month the House unanimously passed H.R. 3700, “Housing Opportunity Through Modernization Act.”
H.R. 3700 takes a number of steps to address existing concerns. These include efforts to make FHA's recertification process "substantially less burdensome," improving a process that is often costly and time-consuming, which condo developments now must repeat every 24 months. H.R. 3700 also lowers FHA's current owner-occupancy requirement from 50 percent to 35 percent and requires FHA to replace existing policy on transfer fees with a less-restrictive model already in place at the Federal Housing Finance Agency.
The bill unanimously passed in the House and has been read into the Senate. It has been referred to the Senate Committee on Banking, Housing, and Urban Affairs and is expected to pass there also.
If it passes, condominium associations may begin the certification process. This process now takes several months to complete. It is expected the changes will speed the process. The change won’t happen overnight, but this much needed legislation is a major step towards making home ownership affordable and available for larger numbers of people.
Charles Chapman has more than 20 years' experience in the Montgomery County real estate market. He has been a full-time agent through rising markets and good times, and also through falling markets an....