Why First-Time Homebuyers Should Look at Condos in October
For first-time homebuyers looking at buying a condo, financing could be getting easier in October.
Federal Housing Administration’s new regulations are aimed to promote sustainable, affordable homeownership of condos, specifically among credit-worthy first-time buyers. The FHA backs loans that require 3.5 percent down payments, where conventional mortgages require 20 percent down.
The new FHA guidelines allow for condo units to be eligible for FHA mortgage insurance even if the condo project itself hasn’t been FHA approved. Only 6.5 percent of the 150,000 condo projects in the United States are approved for the FHA mortgage programs. The new policy, however, means up to 60,000 additional units could become eligible.
Amid constantly changing market conditions, the new policy is designed to be flexible and responsible, according to Forbes.
Updated guidelines impact project and single-unit approvals, as well as owner-occupancy rates. Projects with owner-occupancy rates as low as 35 percent would now be eligible for FHA approval based on financial and operational stability. Under the previous requirements, at least 50 percent of units in a condominium need to be owner-occupied.
The Seattle Times says it’s unclear how much this will impact homeownership rate, as prices have risen faster than incomes and the inventory of homes on the market has been below historical averages.