The Federal Housing Administration (FHA) is a government agency that insures most of the home loans private lenders and banks offer. Because the FHA insures these loans, the stipulations they set often dictate the requirements banks demand from home buyers and developers. For those who invest in condos, there is good news: the FHA has recently relaxed some of their stipulations.
By easing the requirements that condo-investors must meet, the FHA has made it easier to invest in and develop condominiums. Here are some of the specific changes they have made:
- 50 percent of a condominium can be used commercially, as compared to the 25 percent maximum for commercial use that was previously in place. This helps people who live on a second floor and have a studio or café below their residence.
- A single investor can now possess 50 percent of a development project. The previous maximum was 10 percent.
- Homeowner fee delinquencies are now calculated on 60-day delinquencies, rather than 30-day ones.
- Board members are now only required to make a “good faith” effort, which eases their legal responsibility.