It Just Got Easier to Buy and Sell Condos with FHA

Downtown Long Beach condo view

As I've previously posted,  condos haven't gotten a break from HUD for a long time.  Many HOAs, if not most, in Long Beach lost their FHA certification and didn't renew it.  It was once a permanent approval, but due to the 2009 and later mortgage fallouts, HUD required HOAs to renew their FHA loan approvals every two years.  For most Boards, that's a nano-second.  Plus, HUD removed the ability to get a "spot" approval, meaning a single unit could be approved for an FHA purchase, even if the rest of the HOA was not approved.

Finally, HUD is giving back.  Effective October 15, 2019, the new rules (click on the title link) will:

Extend the approval period from two to three years;
Allow for "spot" approvals, those single unit mortgage approvals, up to 20% (currently, none are allowed);
Allow additional flexibility in the ratio of investors to owner-occupants in the association, between 25-75% (currently, 50% owner occupancy required).

To give an idea of how this will help FHA buyers, nationally there are more than 8.7 million condo units, but only 17,792 FHA condo loans were originated in the last year, according to the National Association of Realtors.

These loans changes may also come under specific lenders' requirements, so who you work with on youir FHA loan may have an impact on what HOA may or may not be eligible.  However, since lenders want to make loans, there should be a lot of incentive to help a qualified buyer complete a condo purchase.
These new changes are very beneficial to condo sellers, who should find a buyer faster when not owning in an HOA-approved building.

If you are interested in finding out about a condo purchase, Please contact me.  I've been helping buyers and sellers since 1994!


Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996