Many potential buyers and mortgage lenders have long complained about what they consider to be tight restrictions on condo related FHA mortgage financing.
In an attempt to expand financing options for borrowers purchasing condos the Federal Housing Administration announced changes that make it easier to obtain FHA financing for condos.
The new guidelines, as detailed in the FHA Mortgagee Letter 15-27, expand data used for purposes of determining the owner-occupied percentage, expand the number of condo projects eligible for insurance coverage, and ease the requirements on condominium project recertification. The announced changes will take effect immediately.
In addition to purchases and refinances, the new rules also apply to the Home Equity Conversion Mortgage (HECM) program, also known as the reverse mortgage program.
According to the FHA the new provisions should expand affordable housing options for both lower income and first-time homebuyers. In addition, the relaxed rules should allow for an increased number of condo projects to become eligible for FHA financing.