In order to obtain an FHA mortgage on a condo, at least 50% of the units must be owner occupied. This has been causing problems in development where there are a large proportion of rental units. Under the new rules condo units that are second homes, but not the owner’s principal residence, will be considered owner-occupied units and count towards the total.
There is also an expansion of the types of insurance considered to be acceptable coverage. These will now include state run schemes and co-insurance.
The third change is to streamline the recertification process to make it faster and easier. Condo complexes need to be recertified every two years, but under the new requirements the FHA will now only require applicants to submit documents reflecting substantive changes since the projects prior approval.
These rule changes aid both buyers and sellers. People who have wanted to sell their condo and move into a single family home, should now find it easier to find a qualified buyer (assuming the rule changes positively impact their condo developments FHA status).
While these changes are only temporary, work is underway on a formal ruling to make permanent alterations to its owner-occupancy requirements.