Condominiums offer a great opportunity for first time buyers to enter homeownership and begin to build wealth, equity and credit. FHA (Federal Housing Administration) loans were a popular option for financing as they often offered favorable interest rates and lower down payment options than conventional loans.
In recent years FHA has placed significant restrictions on the purchase and sale of condominiums, preventing some buyers from purchasing condos, harming homeowners who want to sell and limiting the ability of condominium communities to attract buyers. In order to obtain FHA financing on a condominium, the community must meet a strict list of requirements and obtain FHA certification (a labor intensive process and expensive for the HOA) and re-certification is required every several years. As a result, many communities have allowed their FHA certification to lapse and FHA insured condo mortgages have plummeted in recent years.
Lawmakers are urging FHA to review their guidelines and ease restrictions on condominium community certification requirements in an effort to make FHA financing an easier process and promote affordable homeownership opportunities. The National Association of Realtors (NAR) has been pushing FHA on many of these proposed changes for over three years.
Condos are a critical part of the natural progression of homeownership. Reducing the current restrictions impacting FHA condo financing will go a long way in assisting first time buyers who are entering the market, current condo owners who are ready to sell and move up to a larger home and seasoned homeowners who are ready to downsize to a lower maintenance lifestyle.