If you're thinking about buying a condo but don't qualify for a conventional mortgage, the pool of condos available for FHA loans has just been increased. Previously, condo developments were required to have 50% owner occupancy in order for a new buyer to qualify for an FHA loan. Now, condo developments need only have a 35% owner occupancy rate.
On July 14, 2016, the US Senate passed H.R. 3700 the Housing Opportunity Through Modernization Act of 2016 by a unanimous vote. The bill was passed by the House of Representatives in February of this year. It has been sent to President Obama so that he can formally sign it into law.
So what does this bill do? It contains reforms to restrictions on condominium financing as outlined by the Federal Housing Administration (FHA). The bill will make the FHA's recertification process "substantially less burdensome." A major change is reducing the FHA's owner-occupancy requirement from 50% to 35%.
The bill has the backing from the National Association of Realtors, which had testified in support of the bill to the House. The president of NAR Tom Salomone issued the following statement:
"Condominiums often represent an affordable option that's just right for first-time and low-to-moderate income homebuyers. Unfortunately, overly-burdensome restrictions on condo financing have for too long put that option out of reach for many creditworthy borrowers.
"This legislation meets those restrictions head on, putting the dream of homeownership back in reach for more Americans.
"Tight inventory and rising home prices are a reality of today's market, and mortgage credit is hard to come by. We should take every opportunity to clear the path for well-qualified borrowers to purchase a home when they're ready, and this legislation does just that.
"Sens. Tim Scott (R-S.C.) and Robert Menendez (D-N.J.) have done tremendous work to see H.R. 3700 move forward, and we're thankful for their support. Realtors® made their voices heard as well, reaching out to their Senators and Representatives to remind them of how important this issue is to homeownership."
"We look forward to seeing this legislation signed into law so homebuyers can start seeing some much-needed relief."
So what does this mean? For one it makes more condo developments eligible for FHA financing. That may translate to more first time home buyers being able to get a condo and stop paying rent.
It also makes selling a condo much easier for current owners as now more condos will be FHA eligible.
That's a good thing.
If you have any questions about this bill or want to get information on a condo or other property, contact Team Zuhl!
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