Among the new guidelines expected to boost FHA financing for condos are:
· Spot approvals: If an entire condo building wasn’t on the approved FHA list, it was nearly impossible for an individual buyer to obtain FHA financing in the past. The new guidelines allow an individual unit to be approved for FHA financing in a building of 10 or more units, as long as no more than 10 percent of the units in the building have an FHA-insured loan. In smaller buildings, with less than 10 units, no more than two units can have an FHA-insured loan.
· Mixed-use developments: The amount of commercial space allowed in a condo has been increased, which means more condo units in mixed-use developments will be eligible for FHA loans.
· Certifications: The length of time a certification lasts has been extended from two years to three years, and recertification has been streamlined.
· Owner/occupant ratios: The required ratio of owners vs. renters has been dropped from 50 percent to 35 percent to be eligible for an FHA approval.
· FHA loans: Up to 75 percent of all units in a condo project can now have an FHA loan.
Condo buyers can expect an easier path to FHA financing after the rules go into effect in October.