For some, owning a condo is the perfect first home. Right size, limited amount of upkeep, and a good investment. However, if you need a home loan to purchase, and have limited cash reserves, this may be an issue.
Recently the FHA (Federal Housing Association) released information that they are beginning the process of relaxing some of the guidelines.
The main issues (in my opinion), and part of the reason FHA loans for condos are difficult include:
- The percentage of rentals vs. owner-occupied (or second home, or not owned by investors). Owner-ocupied is preferred as it provides stability for the complex.
- Cash reserves. There is a formula used to determine if the complex meets the minimum required cash reserves. If it does not then lending could be difficult.
To open the condo market to first time homebuyers, or those who qualify for FHA (or VA) housing FHA has revised the owner vs. investor percentage, and FHA has changed how it views co-insurance clauses, which will help with the condo associations make the FHA requirements, so they can then become FHA certified.
To check if your developement is FHA approved click below and fill in the information. For further information contact Salus Realty today!