It’s just got easier to buy a condo with a low down payment.
The Federal Housing Administration ( FHA ) insures nearly 20% of mortgages made by private lenders and banks. The FHA has significantly eased condo financing regulations in order to open up homeownership to more first-time buyers. #fha #condo #dtla
Under the new rule, individual condo unit owners may apply for federal mortgage insurance, even if the condo owners association or developer has not applied for funding. Since the agency stopped allowing single-unit approvals in 2008, it has been all but impossible to obtain FHA financing for condominium units. That has now changed. Condo buyers may now expect better results when purchasing with as little as 3.5% down. The legislation will also help condo owners who want to refinance or apply for a reverse mortgage by giving them more options. It is not certain how well FHA loans will work for lofts because loft conversions usually have numerous unusual issues that confound most lenders. These issues include: listed as a commercial or industrial building rather than a residential building; presence of large percentage of commercial units in the building; concrete floors that may be considered “no flooring”; and other lofty issues. For industrial and loft conversions, a loft lender with at least 5% down may still be the most practical way to go for now.
The new FHA rules should open up thousands of additional units for prospective home buyers to consider, many of them at lower than average prices.
“The change will definately give new opportunities to more first-time home buyers,” said Corey Chambers, Broker Associate with Realty Source Inc. “For most renters who plan to stay in the neighborhood for several years, owning a condo unit with low down payment provides much better long-term results than renting because renters generally pay all or most of the mortgage for their landlords, whereas they could instead be building equity and net worth while forever eliminating rent increases.”
The new FHA condo rules lower the owner occupancy rate requirement from 50 percent to 35 percent for properties that are more than one year old and have less than 10 percent of units in arrears on their dues.
More FHA condo details at www.nar.realtor/condominiums/fha-condominium-rule-assessment
The new rules went into effect on Oct. 15, 2019.
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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.