For the longest time there has always been an issue with getting a mortgage through FHA for a condominium, but that is all about to change with the updates to the 2016 FHA Condo Guidelines that just went into effect in the last few weeks. In order for one to obtain FHA Loans for condos, the development they are looking to purchase in must meet some strict guidelines.
The development must be fully insured and is in compliance with applicable state law requirements of the jurisdiction in which the condominium project is located. Condo projects and developments will not be designated FHA Approved unless it has at least 2 units and is fully covered by hazard, liability, and other insurance.Finally, the development also has a limit to the commercial space available and the percentage of units that are deemed rental properties. 2016 FHA Condo Guidelines say any potion of a building that is used for commercial space must conform to typical FHA rules and not be larger than 25% of the total floor space of the development. If the development is more geared toward a rental community, then the rental /investment percentage of the development cannot exceed 50%. It is that last note that has changed, and it has changed for the better!
The 2016 FHA Condo Guidelines that were changed has to deal with the percentage of rental/investment or in some instances non-warrantable condos. Where the FHA rule used to stand at no more than 50%, it has since recently been changed under the Housing Opportunity Through Modernization Act of 2016 where it states that this percentage can now be as much as 65% and still be approved for an FHA Loan. This is great news for people who live in high rental and resort communities that see high percentages of vacation rentals. The reasoning behind this rule change is to improve the market for condos. With the relaxed lending standards of FHA Loans, it can make financing available and easier to obtain buying and selling within condo developments.
As we can see by the 2022 FHA Condo Guidelines update via the Housing Opportunity Through Modernization Act of 2022 there is a proactive approach to getting the market for condos sparked, especially in areas that are vacation rental heavy like Florida. If you have ever been to Florida, you will see that during off season rentals, these communities are scarcely populated with a small percentage of people living there full-time. With the rules being relaxed to 35%, this can spark the sale of homes in these communities to people who would like to live here full-time. With a market like Florida being saturated in vacation communities and low priced options to buy, it would make sense for full-time inhabitants of the area to make these attractive priced condos home. If you’d like to learn more about the new 2016 FHA Condo Guidelines please reach out to me today at 888-900-1020, email@example.com, or visit my website and apply today www.loanconsultants.org.