The new FHA guidelines are restricted on condo complexes that have a high ratio of people who are renters, those who are late in paying their monthly condominium fees and the financial health of the HOA.
The new requirements also dictate that new projects must pre-sale a minimum of 30% of their residences. In 2011 a developer must pre-sale 50% to be financed through the FHA with a few exceptions. In 2011, the number of FHA purchasers in a complex will be limited to 30% of the condos in the building.
As the FHA is now an important source of financing for buyers of condominiums these rules will have a negative effect on those who wish to take advantage of the FHA's present down payment requirement of only 3.5 percent. These new requirements for borrowers, while created to ensure that they buy into condominium buildings that are successful, will also limit the number of purchase choices available to them. And, as Fannie Mae and Freddie Mac have announced their new restrictions, which limits the number of loan options for potential purchasers of condominiums.
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