New FHA Rules on Condos
It’s big news for homebuyers, and especially first-time homebuyers. As of October 15th, Bank of England Mortgage Boston has fully embraced the FHA’s new condominium approval rule that went into effect this month. Borrowers across the counties of Norfolk, Plymouth, Suffolk, and Middlesex can benefit from loan amounts as high as $688,850
The revised policy includes the ability to approve individual units in non-approved condo projects. This matters in every market – from Boston to San Francisco – because out of more than 350,000 condominium complexes in the US, less than 35% are FHA-approved. The new rule creates more flexibility by allowing single units to be eligible, even if the entire complex is not approved.
According to HUD, the long-awaited regulation is set to alleviate some of the barriers to affordable homeownership opportunities in the housing market. The revised policy includes the following key components:
- Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
- Extends the recertification requirement for approved condominium projects from two to three years;
- Allows more mixed-use projects to be eligible for FHA insurance.
The bottom line is that as a result of FHA’s new policy, HUD estimates that 20,000-60,000 condo units would become eligible for FHA-insured financing annually. In Massachusetts, borrowers across the counties of Norfolk, Plymouth, Suffolk, and Middlesex can benefit from loan amounts as high as $688,850.
On top of that, FHA loans make it easier for homebuyers in that they are historically more lenient than Fannie Mae guidelines, with the ability to accommodate lower credit scores and down payments as low as 3.5%. It’s a big win for homebuyers!