The Seattle Times has a good article on the FHA financing rules changes for condominiums that take effect on November 2nd, 2011. These rules may make FHA loans more difficult to obtain for some condominiums.
FHA financing can enable borrowers to get loans with less downpayment (as little as 3.5%), and are kinder to applicants with lower credit scores, then conventional mortgage loans (usually require 20% down payment.)
Because of the smaller down payments and that it goes easier on people with low credit scores, about one-third of homebuyers are getting FHA loans this year.
If you are interested in buying a condominium, it is a good idea to investigate the following rule changes in addition to reviewing the resale certificate, review of board meeting minutes, and conducting physical inspections.
• “Spot approvals” are eliminated, and now the entire project has to meet FHA approval before a borrower can get an FHA-insured loan.
• A maximum of 30 percent of the condo project’s units can have FHA-insured mortgages. There was no such limitation previously.
• Before the FHA will insure a mortgage on a condo, at least half the units must have already been sold. Again, there was no such limitation previously.
See full article for more information: Seattle Times Article
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