FHA-Backed Mortgages Become Easier To Receive

The Federal Housing Administration (FHA) has taken action to modify its regulations in order to make it easier for buyers of condominiums to receive FHA-backed mortgages. FHA-backed mortgages are desirable because, unlike conventional mortgages that typically require a 20% down payment, the FHA-back loans only require a 3.5% down payment.

Prior to the changes, only a small percentage (estimated to be 6.5%) of the condominium developments in the United States were eligible for FHA-backed mortgages. Under the guidelines, potential buyers and existing owners wanting to refinance their units, could not get an FHA loan on a condominium unless the entire development that the condominium is part of has obtained FHA certification.

Under the revised guidelines, which take effect on October 15, 2019, individual condominiums will be eligible on a case-by-case basis if no more than 10% of the units in the complex are FHA insured. For complexes with less than 10 units, no more than two units will be able to have an FHA backed mortgage.

Some of the other provisions in the revised guidelines include: