FHA Principal Deputy Assistant Secretary Ed Golding announced at NAR 360 some big changes to FHA condo financing rules, which will be effective immediately. Calculations for owner-occupied percentages are changing, so that second homes will no longer be counted against the 50% owner-occupied requirement for eligible developments. Insurance requirements are also being adjusted to allow more developments to qualify. Third, the old recertification process that had to occur every two years is being revamped. More details on the recertification changes will be forthcoming tomorrow.
This will open up a tremendously popular low down payment financing option to a huge market segment that suffered disproportionately in the economic downturn due to lack of availability of low down payment financing options. While this will be an improvement for any market with condominiums, its impact could be huge in markets where many condominiums are owned as second homes. In those markets, the old rule of counting second homes as non-owner-occupied for the purposes of FHA eligibility rendered a huge number of condo developments off-limits to aspiring low down payment owner occupant buyers.
This is good news for buyers, and the increased demand that these changes will make possible is great news for anyone who owns a condo now.