Sunday, January 27, 2013

FHA Regulations Regarding Condos Are Loosening

Have you been burdened by trying to buy or sell a condo because of the strict FHA regulations? If you own a condo, chances are you know about these. There are a lot of rules and guidelines that come with trying to purchase homes using FHA financing (which is the largest source of low-down payments on mortgages) In the past, in order to buy a condo using FHA, they have had rules that say things like: you can't buy a condo if more than 25% of the buildings' space is used for commercial or is not part of the living space of a condo. They've also put strict regulations on the owner to renter ratio in a complex saying that if a certain amount of the condos are rented, then the whole building can not qualify for someone who wants to use FHA financing to buy a unit in that building. This has been tough to work around for complex in cities that are becoming very popular called "mixed use" or "live/work" condos. This has also been a huge challenge in these hard financial times where people couldn't sell their condos when they lost so much equity in them, so instead, decided to rent them.  This made it hard for other owners that needed to sell their unit, but now had a lot of units in their building that were being rented.
Well, we are seeing some light at the end of this tunnel and here is what has been changing with FHA and condos:

*now, condo buildings can have up to 35% commercial use, and in certain circumstances even up to 50%

*In existing developments, one or more investors are now allowed to own up to 50% of the total units provided that at least half of the units are owner-occupied.

*and lastly, FHA had language written in their regulations that could potentially put condo board members at risk of being heavily fined or even face jail time by admitting, or not admitting, to conditions they knew about their building. This language has now changed and does not put board members of condo buildings in such a burdensome crossroads of liability with these things. 

All in all, these are positive steps in the right direction and will help more sales of condo units which is great news for both sellers and buyer.  You can find more information about FHA regulations and condos here: http://speakingofrealestate.blogs.realtor.org/2012/09/13/fha-eases-some-key-condo-financing-limits/

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