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If you live in D.C. or some other suburbs near the District, you may prefer to buy a condo for your first home. Depending on your lifestyle, a condo could continue to be a great housing choice. Financing a condo can be challenging though, especially if you hope to obtain an FHA mortgage. But some new rules issued over the past few months could make it easier until December 31, 2010.

For years, FHA was viewed as a low income option, so many condo buildings did not seek the FHA-approval necessary to allow this type of loan because they did not want to cheapen their image. Now that FHA has become the financing tool of choice for many buyers in all price brackets, it’s time for condo associations to change their way of looking at things – especially as some condos have high vacancy rates due to foreclosures. New federal rules have opened the door for condos to decrease vacancy rates through more accessible financing.

Old Rule:

FHA would not approve mortgages until half of the units in new developments were sold.

New Rule:

Now only 30% of the units have to be sold before FHA mortgages will be issued.

Old Rule:

FHA mortgage concentration could not exceed 30%.

New Rule:

Per mortgagee letter (2009-46 A) issued 11/9/2009, 100% of the building can be FHA-financed under certain circumstances.

Old Rule:

50% of building must be owner-occupied.

New Rule:

Foreclosed (and thereby vacant) properties are excluded from the equation.

You can read all the changes about FHA condo financing here.  If you are interested in buying a condo, or have any questions about the new rules, contact Express Realty Services today. We can show you the best properties in DC, Maryland, and Virginia, and help you make one yours today.

A couple months ago, we mentioned how changes to FHA rules were getting tougher in the future.  The future is almost upon us now – when considering the Mortgage Insurance Premium Factor.  so if you’ve not been assigned an FHA case number by April 5, you will be paying 2.25% rather than 1.75% for your home loan.

The 2.25% fee is an upfront fee for now, although it will annualize in the future.  It is still financed over the cost of the loan.

This rule is one of a series of changes meant to make FHA stronger in the face of growing delinquency.  Other rules include increasing the percentage of down payment for buyers with credit scores under 580 and lessening the amount a seller can contribute to closing costs. These will be effective this summer.

FHA is committed to helping more people have access to home ownership but according to Federal Housing Administration (FHA) Commissioner David Stevens, the changes are necessary to strengthen capital results while upholding other goals.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important. When combined with the risk management measures announced in September, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”

Despite the rate hike in mortgage insurance, FHA is still a good deal for most borrowers.

Express Realty Services can help you find a great affordable home in DC, Maryland, or Virginia.  Contact us today for details.