New FHA Loan Guidelines For Condominiums!
There is a new development for all condo buyers! If you saw recently in the news, there are some new guidelines that allow for FHA loans to be approved for individual condominium units. Prior to this new guideline, FHA loans for a single condo could only be approved if the entire building itself was pre-approved to receive FHA loans. Now, individual condos can be approved even if the project / building has not been FHA approved. What this means, any person looking to purchase a condo using a FHA loan no longer has to choose a unit that is designated only to pre-approved FHA loan buildings. This is a major policy change that was made in an effort to promote affordable and sustainable home ownership, especially among credit worthy first time home buyers!
An FHA insured loan is a US Federal Housing Administration mortgage loan that is provided by an FHA-approved lender. Typically these loans are geared towards new house owners rather than investors, thus they are a bit different from conventional loans. The home must be owner occupied for at least a year to receive an FHA loan. The first step in applying for this type of loan is to contact lenders who have been approved by the FHA. The lender will then work with the buyer to see where they stand and what amount they could afford to take out as a loan. Usually an FHA loan will require a minimum FICO score of 580, though some will accept a score at 500 for a higher percent down.
A few rules that align with this policy change includes a single unit approval process, which means you can only have one loan out at a time. Also, if the building you are choosing to purchase in is a non-approved condominium projection with more than 10 units, up to 10% of them can be FHA-insured. Non-approved projects / buildings with fewer than 10 units can only have up to 2 FHA-insured units.
Condominiums have increasingly become a source of affordable and sustainable home ownership for many families here in Chicago, and all over the United States. This new policy is taking a huge step forward in making home ownership available to many more Americans.