FHA Revises Condo Rules
FHA Revises Condo Rules
I hope every enjoyed a wonderful Veteran’s Day. My deepest thanks and appreciation go out to the men and women who sacrifice to preserve our freedoms and way of life.
This morning I read an article from my Realtor Magazine discussing changes that have already happened and ones soon to happen regarding FHA rules and regulations for condo sales. As some of you may know, purchasing low – end condos with the intent to rent as an investment has been very popular over the last 12-18 months. In the Jacksonville area I’ve seen a lot of this personally. This time last year there were condos all over the Southside Blvd. area that were selling for 1/3 of their original sale price. Rent was high, units were cheap, so why not buy one? Well, unless you were paying cash, it wasn’t that easy. At that time there were a lot of FHA regulations that made borrowing money on condos very difficult.
There were a number of changes to FHA guidelines; I’m going to discuss the three that will affect our market the most.
Previously, FHA would not loan on a unit in a project in which 15% of home owners are 30 days delinquent on their HOA dues. They have now have pushed it back to 60 days.
Although they haven’t officially made this change yet, Realtor Magazine says it’s coming early next year. It’s about owner occupancy. After prices dove in 2007-09 many units were picked up by investors, which they in turn rented out. There was so much of this going on that some condo buildings had more renters than owner occupants. FHA would not make a loan on a unit in a building with less than 50% owner occupancy. This time last year that ruled out quite a few buildings, disappointing to me, but more so for my buyer. Speaking of that buyer, congrats to my friend, Matt Snyder; who on this day last year became a home owner.
Another impending change relates to FHA financing within a condo development. Currently, FHA will not approve a loan if 50% of the units in a project already have FHA loans. Just another regulation that makes selling condos difficult. We’ll see what they do to remedy this, a number of ideas have been tossed around including “spot approvals”. As soon as something officially happens you all will be the first to know.
Buying and selling condos can be tricky, much different than a single family home. Having a realtor with not only in depth market knowledge but also who is up to date on the rules and regulations is paramount. Whether it’s a first purchase, an investment or a resale I can save you time and money.