New FHA condo rules affect hundreds of sales
What the lender, the buyer and the real estate agents need to know to get to the closing table.
FHA won’t insure mortgages in buildings or complexes where less than 30 percent of the units haven’t been sold.
No less than 50% of the units in a project must be owner-occupied or sold to purchasers who intend to occupy them.
No owner or investor can hold title to more than 10 percent of the units in the entire project.
No more than 25% of the square footage of a condo project can be non-residential, or used for commercial purposes.
Not less than 50% of the units can have FHA insured financing on them. FHA is looking to minimize its risk on a specific project.
No more than 15% of the units in a project can be 30 days ore more delinquent on the monthly condo association payments.
Concerns are mounting that these new rules will curtail the availability of low-downpayment FHA financing to a large percentage of today’s buyers. The driving force in our market is the first time home buyer, and this makes no sense. FHA loans offer low down payment options to prospective buyers, without these precious buyers more sellers will feel the pinch, thus hurt our market.
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