The new FHA condo rule change is great news for first-time urban home buyers. This month the FHA decided to loosen the restrictions for FHA loans for condo buyers. It will now allow more FHA loans in a single project, give more flexibility in owner/occupancy ratios, and more.
Reactions from NVAR
“We are thrilled that Secretary Carson has taken this much-needed step to put the American Dream within reach for thousands of additional families,” said NAR President John Smaby. “…Condominiums are often the most affordable option for first-time homebuyers, small families and those in urban areas. This ruling…will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”
Condos are constantly in demand, not just for first-time home buyers, but for seniors hoping to downsize and stay close to town. This rule change will also help the aging population. Condos are often close to hospitals, grocery stores and other urban conveniences. Seniors value affordability and convenience when they are looking to downsize.
Official Statement from HUD
HUD Acting Deputy Secretary and FHA Commissioner Brian Montgomery added, “Today we are making certain FHA responds to what the market is telling us. This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership…”
Many (84 percent) FHA-insured condo buyers have never owned a home before. Only 6.5 percent of condominium projects in the U.S. are approved to participate in FHA’s mortgage insurance programs. With the FHA’s new policy, they estimate that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.
What does this mean for me?