I have great news for you! The Federal Housing Administration published new guidelines Wednesday; you see how fresh it is, to simplify the issuance of low down-payment loans when you want to buy a condo. You may not be aware of that, but so far it was hard for you guys if you wanted to buy a condo to get a 3.5% down-payment loan!
Why were new guidelines necessary?
In the U.S., there are more than 8.7 million condo units. Last year, less than 18,000 buyers were able to get an FHA loan for a condo. Just around 2% of the total units nationwide.
So why is it newsworthy, because condominiums are an important part of the housing options you have. They are often more affordable, especially for first time home buyers, or when you live in a densely populated city. Owning your condo may be cheaper than renting an apartment or a townhouse; you have to check.
If you are thinking of downsizing, condos are also a great option. You have a community around you. A lot of condos have spaces where residents can interact, like a rooftop, a gym, a swimming pool. Some communities also organize events where you can meet interesting people.
Overall, condos may be a cheaper way to live, both through the lower purchasing price and the lower yearly insurance premium, and at the same time provide you with top-notch amenities you can enjoy without any upkeep on your part.
The new FHA guidelines for condo mortgage
So what are the new guidelines?
So far the building in its totality had to be approved by the FHA. Now, and it is where it is so essential for you, you can get an FHA loan for a single-unit.
This new single-unit approval process makes it easier for you to buy individual condo units. You are eligible for an FHA loan if the condo building is financially stable.
Financially stable means that the HOA fees have been paid by the other owners. But would you want to buy a condo in a building that is not sufficiently maintained, due to financial hardship? I guess you wouldn’t. Or at least you shouldn’t. It is just common sense.
Should you rush to a lender to get more information? Yes, it is always good to know what are your options, but the changes become effective on October 15, 2019. So you have time to prepare.
New guidelines for developers
The new guidelines streamline the approval process for new condo developments, making it easier. So we should see more projects because developers have now more flexibility.
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