FHA SLASHES CONDO APPROVAL REQUIREMENTS BY 15%

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Mortgage and Lending with New American Funding NMLS# 613321

FHA Slashes Condo Approval Requirements by 15%

It may be time to take a second look at condo projects that were previously off-limits for FHA loan approval.  Up until now, at least 50% of the units in an existing condo project needed to be owner-occupied in order to qualify for a loan insured by the Federal Housing Administration (FHA).  The reason for this requirement is FHA believes that owners who live in their condo unit tend to be more incentivized to take care of the their units and the overall condo project vs. renters or investors.  However, in response to a new law passed earlier this year, FHA has lowered their owner-occupied requirement on existing condos from 50% to 35% as long as these conditions are met:

  1. Borrowers have to apply for a formal exception;
  2. No more than 10 percent of the total units can be more than 60 days past due on their condo association dues;
  3. The condo association has to show adequate financial reserves for capital expenditures and maintenance (at least 20% of the budget); and,
  4. The condo association has to provide 3 years of financial records.

This is great news for many homebuyers, especially in light of the low housing inventory challenges being faced in today’s market.  Contact me for further info, or if you’d like to take a second look at a condo project that was previously off-limits for FHA financing.

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Re-Blogged 2 times:

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Topic:
Lending / Financial
Tags:
fha
fha condo approval

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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

John thank you for the information, I had not seen these changes to the FHA Condo Guidelines yet.

Dec 19, 2016 06:32 PM #1
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Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900
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Family Helping Families Buy & Sell Homes 40+ Years

It will be interesting to see how these changes help FHA home buyers.

Dec 19, 2016 07:14 PM #2
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Jerry Newman
Brown Realty, 210-789-4216,www.JeremiahNewman.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

John, This is certainly some great news for FHA buyers, who were looking at purchasing a condo. I know in years past this has been a stumbling block for many first time home buyers.

Dec 21, 2016 11:45 AM #3
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John Lemos
New American Funding - Anaheim, CA
Your Mortgage Expert

HI Jerry thank you for your comment. Yes it will open the door a little wider for condo financing.

Dec 21, 2016 04:15 PM #4
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Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi John, Condo projects have always been a challenge because of the 50% rule.  This is good news!

Dec 22, 2016 11:28 AM #5
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