FHA Financing May Return to Condominiums With Low Down Payments
Great news! The Federal Housing Administration (“FHA”) may start allowing condominium buyers to take advantage of new FHA low down payments programs. This would be great news for first time home buyers and Seniors seeking reverse mortgage financing.
FHA has very lenient underwriting requirements for those with limited (or less than perfect) credit. FHA programs offer down payments as low as 3.5% and seller closing cost contributions up to 6%. FHA programs also allow the borrower to receive down payment assistance from family members, friends and employers.
For Senior Citizens considering a reverse mortgage to improve their cash flow, an FHA reverse mortgage is a perfect match.
Housing and Urban Development (“HUD”) Secretary Julian Castro has announced that HUD will streamline the certification process for condominium buildings, allowing units in FHA approved buildings to qualify for these FHA programs.
Experts are expecting the following reforms:
- Spot Approvals: allows Seniors, first time home buyers, Millennials, minorities and low income wage earners to purchase or refinance a condominium without the entire building having to be certified by FHA.
- Streamline process: The current process for a building approval is tedious and lengthy. Reducing restrictions would increase homeowner and lender participation.
- Lender relationships: FHA will inform lenders of the new FHA program changes and provide details on what requirements will be necessary for the FHA to back these types of loans and how these loans will qualify for the current FHA Mortgage Insurance Program.
We expect the Senate to pass the proposed changes to the FHA rules and for them to be begin rolling out as early as November of 2016.