A bit of good news for the condominium buyers out there; the Federal Housing Finance Administration (FHA) recently revised its condominium certification rules, making it easier to qualify condominiums for FHA financing.
The rules, which were issued September 13th and took effect immediately, should make it easier for a larger number of homeowner associations to seek certification by the FHA. Without approval of an entire development, no individual unit can be financed or refinanced with an FHA mortgage. The previous rules prohibited FHA insurance of units in buildings where more than 25 percent of the total floor space was used for commercial or nonresidential purposes. Yet many condominiums in urban areas have lower floors devoted to retail stores and offices that generate revenues that help support the entire project. The revised rules allow exceptions of up to 35 percent commercial use, and provide for additional case-by-case exceptions to 50 percent or higher.
The revisions could remove at least some of the obstacles that have dissuaded condominium homeowner association boards from seeking FHA approval or re-certification Homeowners already deal with a number of regulations with their HOA and can now check off the hardest battle; approval for the loan.
FHA is the largest source of funding for low down payment condo mortgages. With the revised rules in place, many first time buyers are happy to know they can move forward with their search and purchase of a condominium as their first step toward the American Dream of owning a home.