FHA Condo Regulations Ease

The long-waited Federal Housing Administration (FHA) rule regulating condominium lending was finalized last week.The new rule, which becomes effective on October 15, will allow a homebuyer to obtain an FHA mortgage for an individual condo unit in an unapproved condominium project if that project is completed and meets the following criteria:

 

• In a development with fewer than 10 units, no more than two can be insured by FHA.
• In a development that exceeds 10 units, a maximum of 10 percent can be insured by the FHA.
• A minimum of 50 percent of project units must be owner-occupied.

 

The rule change also extends the certification period from two to three years and expands the eligibility criteria for mixed-use units. HUD estimates the new rules will make an additional 20,000 to 60,000 condo units eligible for FHA insured loans each year