Mortgages Today Are More Accessible  

With just a 3.5% down payment, you can now buy your home.

As of the third quarter of 2019, there are more condominiums that can get approved to be purchased through an FHA loan.


Edda Pujadas


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In an effort to promote access to become a homeowner, especially for first time buyers, the Federal Housing Authority updated its regulations in the third quarter of 2019 and established a new process to approve condominiums.

While the loans designed specifically for first-time buyers have always been a possibility for people that do not already have a home and allow them to buy a property with low interest and low down payment, the new regulations for FHA loans now include the possibility to approve units or condominium projects individually.

What does this mean? Before the publication of these regulations, in order for a person to be able to buy an apartment through an FHA loan, the apartment had to be one of the previously approved ones for this type of loans. Unfortunately, there were very few condominiums in Miami Dade that were already qualified.

Now, when someone wants to buy an apartment, both the building and the unit will be evaluated individually to know if they qualify for the loan. Some factors that will be taken into consideration to grant or not this approval will be that the condo has in its budget more than 10% in reserves, that it is occupied mainly by owners and not tenants in at least 50% and that only 10% of the apartments have been bought through the FHA.

In reality, what has to be shown for a unit or apartment to qualify for an FHA loan, is that the condo where the apartment is located is financially stable, which is basically the same that is required for a conventional loan.

Another change that was introduced by the new regulations of the FHA, and that seeks to be in agreement with the current market conditions, is that it extends the recertification period for approved projects from two to three years. The process will also be easier this time because now the condo management must only update any new information instead of sending the whole package again on the project.

The FHA now also allows for more mixed-use constructions to be eligible for mortgage loans. In this case, the financing company will require that the commercial space or non-residential space within the approved condo project does not exceed 35% of the total area of the complex.

According to what the FHA authorities have informed us, the main reason for these changes is that condos have become a stronger source of property for many families and this will open a big possibility for the younger generations to be able to purchase for the first time, this will also be a good opportunity for Seniors that have never had the opportunity to buy a home.

Statistically speaking, this change in the FHA regulations will open a world of possibilities. According to the US Housing and Urban Development Department (HUD), there are currently more than 150,000 condo projects in the United States, but only 6.5% of these are approved to participate in the mortgage insurance programs from the FHA. As a result of this new policy, it is estimated that between 20,000 and 60,000 condo units could be eligible for insured financing from the FHA on a yearly basis.

These changes predict that condos will play an important role in the mortgage origination market in the years to come because a lot of the buyers will be able to come into the housing market with the possibility to acquire an apartment that, in general terms, has a lower price than single-family homes.

Another important update in the mortgage loans from the FHA is that the new limit for the Miami Dade and Broward Counties has been established at $373,750, which extends the range of both the buyers and the properties that will be able to qualify for this financing option that seeks to promote the acquisition of real estate in a sustainable way.

It is important to remember that the FHA loans have always been a good option for first-time buyers that might not have been able to save enough for a big down payment, and for this reason, they allow the buyer to be able only to provide a 3.5% down payment.

In order to be approved for this type of loan, the buyer must have a minimum credit score of 580, at least two years in his current job, present his latest tax return, and the property must be used as the main dwelling. The person can get an interest rate under 4% and a 30-year loan period.

With these new regulations, the FHA wants to get closer to the idea for which it was conceived in 1934 under the government of Franklin Delano Roosevelt: to provide a housing financial system that allows those with low or moderate-income to become homeowners.


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