FHA Announces More Lenient Guidelines for Condos

• November 11th 2009

by Mark Wellborn

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The FHA recently announced temporary changes that will make both condo developers and condo buyers happy.

Beginning on December 7th, FHA-approved condos will allow settlements at 30 percent presales, and at a 50 percent concentration level. In layman’s terms, that means that buyers using FHA loans can settle on their unit once 30 percent of the units in a building have been pre-sold, and that 50 percent of units (or a 50 percent concentration level) in the building can be purchased using FHA financing.

“Historically, FHA buyers could not settle on their units until 51 percent of the units in a building had been pre-sold,” Alex Jaffe of First Home Mortgage told UrbanTurf. “Also, the number of buyers in a development using FHA loans has historically been capped at 30 percent.”

Jaffe said the advantage of these temporary policies to buyers is that they can move in to their unit sooner. For developers, the higher occupancy level will make the building more marketable.

“New properties will seem more attractive, and overall it will help sales move quicker,” Jaffe said.

However, the change is only temporary, lasting through the end of 2010. In 2011, FHA-approved condos will allow settlements at 50 percent pre-sales, and the concentration level of units bought in a single building using FHA loans will revert back to 30 percent.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/fha_announces_more_lenient_guidelines_for_condos/1505.