FHA ISSUES NEW CONDOMINIUM APPROVAL RULE

HUD

In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first-time buyers, the Federal Housing Administration (FHA) today published a long-awaited final regulation, and policy implementation guidance, which establish a new condominium approval process.

Designed to be flexible and responsive to market conditions, FHA’s new condo rule and the new Condominium Project Approval section of the Single Family Housing Policy Handbook, provide a comprehensive revision to FHA condominium project approval policy.  In particular, the new policy will allow certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved. The polices become effective October 15, 2019. Read FHA’s new condominium approval regulation.

FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities. FHA’s new rule:

  • 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.

“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,” said U.S. Housing and Urban Development Secretary Ben Carson. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”

HUD Acting Deputy Secretary and FHA Commissioner Brian Montgomery added, “Today we are making certain FHA responds to what the market is telling us. This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership and are most likely to enter the market with the purchase of a condominium.”

The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.  As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.

Single Family Policy Handbook Guidance

FHA’s new Single Family Handbook sections published today provide the additional requirements that lenders and other industry participants need in order to implement FHA’s new policy, including requirements for single-unit approvals, minimum owner occupancy requirements, and commercial/non-residential space limits. Read FHA’s changes to its Single Family Handbook.

Single-Unit Approvals

As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved.  An individual unit may be eligible for Single-Unit Approval under the following conditions:

  • The individual condominium unit is located in a completed project that is not approved;
  • For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

Minimum Owner-Occupancy Requirements

FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.

FHA Insurance Concentration in Condominium Projects

FHA will only insure up to 50 percent of the total number of units in an approved condominium project.

Commercial/Nonresidential Space Limits

FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.

Mortgage Rate Update

Mortgage News Update

Mortgage rates moved higher after remaining at around the same level for about three weeks. The rise in rates was driven by continued improvement in consumer spending and partly due to optimism around a forthcoming cut in short term interest rates, which should provide support for business and investor sentiment.  The 30-year fixed-rate mortgage averaged 3.81 percent with an average 0.60 point fee for the week ending July 17, 2019, up from last week when it averaged 3.75 percent.  A year ago at this time, the 30-year fixed-rate mortgage averaged 4.52 percent.

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Nevada Rural

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Thanks to the Home At Last down payment assistance program we have OUR HOME!  Our dreams are coming one step closer to all we had hoped for. We appreciate all the help in purchasing our home so our new chapter in life could begin. So very blessed to be honored by this program. Words cannot provide the gratitude we have for this opportunity!” – Jeannette in Reno

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Mortgage Rates Dive Deeper

Mortgage News Update

While signals from the financial markets are flashing caution signs, the real economy remains on solid ground.  The 30-year fixed-rate mortgage averaged 4.07 percent with an average 0.50 point fee for the week ending May 16, 2019, down from last week when it averaged 4.10 percent.  A year ago at this time, the 30-year fixed-rate mortgage averaged 4.61 percent.

Need Mortgage Assistance?

home at last

Contact Doug from Academy Mortgage. Need down payment assistance? The Nevada Rural Housing Authority has plans that basically give you your down payment. As long as you live in the home, the three year loan for your down payment is paid by the program. If that isn’t free I don’t know what else to call it. Doug can explain the plan better to you. Give him a call and please let him know Robert Stiles referred you. Thank you.

Doug KallerLoan Officer |NMLS #312085 5250 South Virginia 240Reno, NV 89502( D: (775) 828-7006 | C: (775) 250-4421( F: (888) 449-7473 | O: (775) 828-7000* doug.kaller@AcademyMortgage.comwww.AcademyMortgage.com/dougkallerNMLS #312085 I NV License #10361Corp NMLS #3113 I Corp NV License #2731