The Federal Housing Administration (FHA) has a process that pre-approves condominium projects so loans are easier to procure. In the past, most resort condominiums have been unable to receive approval. But a recent update to the FHA regulations may change this unfriendly trend.
Prior regulations required the condominium to have 50% of the units as owner-occupied. Considering that most local community associations are second homes or investment communities, this number was difficult to reach. Now, the number has been lowered to 35% of units being owner-occupied for FHA approval. This could allow several communities to apply for financing through the FHA.
A quick glance at the other FHA changes:
|Prior Requirement||Current Requirement|
|FHA approval granted for 2 years||FHA approval granted for 3 years|
|Owner occupancy must be at 50%||Owner occupancy must be at 35%|
|Commercial space was not allowed||Commercial space up to 45% will be considered|
|Public comment on changes not available||30 day public comment|
|Entire project must be approved||Single units could be approved|
Condominium living is becoming more and more popular and these new FHA guidelines will allow more Americans to purchase condominium-style homes. For details about the new approval rules, check out this update from Community Association Institute.