The Condo Mania Team
Great News for FHA buyers and Phoenix Condos
published on 2019-12-07
After months of promising to loosen FHA rules for condos, the Department of Housing and Urban Development (HUD) finally released their updated rules.
In the past, condo communities had to have a HUD approval before any lender could close a loan in that condo. It required the HOA to be interested enough to be helpful in providing the loads of paperwork required and someone to spearhead the process of getting the approval. As a result, in Phoenix, there are about 100 condo communities that have FHA approval, and in Scottsdale, only 33. There were ways to get an exception to this approval but it was cumbersome.
Under the new rules, communities can still apply for FHA approval, but they don't have to. Instead, as long as a community meets this criteria, a buyer can get FHA financing:
- Only 10% of condos can be insured by FHA. For communities with 10 or less condos, only 2 can be insured by FHA
- 50% of units must be owner occupied.
Why is this Important?
FHA insured mortgages are typically used by first time homebuyers because they often don't have the funds for a normal 10-20% downpayment. FHA insured loans only need a downpayment of 3.5% of the purchase price as long as you have a 580 credit score or higher. Lower credit scores may work but the downpayment requirements increase.
Because condos are often less expensive than single family homes, previous rules kept first time homebuyers out of the condo market.
If you're a first time homebuyer, you'll want to look into purchasing soon. Lower priced condos are still leaving the market quickly and the 10% rule may come into play once more first-time home buyers realize there is a path into condo ownership.
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Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.
The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.
Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.
Last Updated: 2021-10-17 06:54:11