FHA Issues New Rulings for Condos

The FHA has issued some new rulings relaxing some of the criteria they developed in a previous letter and should assist the condo market overall. When I asked Steve Tetzner of Homestar Mortgage how this would affect the marketplace, he was enthusiastic since the limiting provisions were deleted for the next year. In particular, he cited the percentage of a complex that could have FHA funding. Originally it was limited to 50%, but now the entire complex can be funded through the agency, provided certain conditions are met. However, the new rules are still focused on getting individuals into the ownership role and not speculators, since there still is a limit to 10 percent of the complex for a single owner and fifty percent of the units must be owner-occupied. When the project is 10 or fewer, an owner can only have one unit. In the case of new construction, there are other exceptions, since these units may not be completely pre-sold and the limitations need to take that situation into account. The rulings are complicated and change due to market conditions, so contact your mortgage company to get a clear understanding of the rules and professional advice in financing a Condo unit.