The new FHA loan rule for condominiums helps first time home buyers tremendously. Announced yesterday in a press release, the new rule takes effect on October 15th.
FHA Approved Condominiums
The FHA Condominium Project Approval & Processing Guide is 95 pages long. Requirements are strict and it’s a costly, tedious process for any condo association. Condominium associations simply don’t apply due to the cost and aggravation.
You use the FHA website to find out which condos are approved. Sort by County, put in New Jersey as the State, Bergen as the County and click Send at the bottom of the page for results. It is surprising to see how many buildings were rejected by the FHA.
Bergen County FHA Approved Condominiums
There are only 5 approved condominiums in Bergen County. They are Baridge House and Carlyle Towers in Hackensack, Darlington Ridge and Paddington Square in Mahwah and Regency Park in Ramsey. Several have approvals expiring this year.
It is shocking to learn only 5 are approved since there are hundreds of Bergen County condo buildings. This makes it very tough for first time home buyers because condos are often affordable. As a result many people who could qualify for an affordable condo are stuck in rentals.
The New FHA Condominium Loan Rule
The new FHA condominium loan rule aims to solve this problem. It is no longer necessary for a building to be FHA approved. The new rule states that just the unit itself can be approved. That’s huge.
The FHA tells us that 84% of it’s borrowers are first time home buyers. Condo apartments are often an affordable start to home ownership. Because of this, the new FHA loan rule was created to increase the number of approved condos.
Additionally, this might force associations to apply for approval. Condo owners will take notice and ask their associations to apply for building approval. Similarly unit owners will hold association feet to the fire and ask why their building failed.
You Can Buy An Unapproved Condo
Because almost all condos in Bergen County are unapproved, how can you buy a Bergen County condominium? Banks have a solution. The use a questionaire which is sent to the building management office. As a result, banks can verify the financial health and other things. As soon as the questionaire is returned with the bank’s requirements, the mortgage process proceeds. Moreover, buyers can’t use FHA financing.
In brief, most condomiums are not FHA approved. However you can still buy them using a condo questionaire and conventional financing.
Please remember the new FHA loan rule takes effect on October 15th and change does take time. If you have questions or need help, call or text me at 201-741-8490.