If you’re a first time home buyer trying buy a condo in the southern California market using FHA approved condo financing, you’ve undoubtedly run across some challenges. With strong southern California home price appreciation, tight underwriting requirements, and too-few homes for sale at affordable price points, many first time home buyers feel as if their dream of home ownership will never come true.
Well, there’s a bit of good news to report that will hopefully makes FHA approved condo financing a little easier. The Federal Housing Administration (FHA) made some announcements at the 2015 REALTORS® Conference & Expo in San Diego that will help loosen some of the restrictive lending guidelines that were previously in place.
The major change is that second homes are no longer considered “investment property” for purposes of determining the owner-occupancy ratio of a project. This means that if someone who owns a unit in a condo project that uses the unit as a second home, that unit doesn’t count as part of FHA’s 50-percent owner-occupancy requirement. This is great because many condo projects have units that are used as second homes so this will help boost the “owner occupant” ratio which may open up more condo projects to be eligible for FHA financing.
Two other changes were announced by the Federal Housing Administration that will also help with FHA approved condo financing. The first is a streamlined recertification process and the second is an expansion of the types of insurance condo owner associations can have for their project to be eligible for FHA financing.
These three changes are big news for first time home buyers trying to obtain FHA approved condo financing. Hopefully things change in the months ahead to see if the eased requirements lead to more households obtaining FHA financing for condo purchases.