What is the fundamental issue?
After more than a decade of advocacy by NAR, FHA has published new condominium guidelines that reduce burdens on properties to become approved.
I am a real estate professional. What does this mean for my business?
We believe the new changes could result in 60,000 more units available per year.
Condominiums continue to be the most affordable homeownership option for many first time buyers, small families, single people, and older Americans. NAR strongly supports loosening FHA’s condominium rules to ensure that more homeowners will be able to sell their units, and homebuyers will have more opportunities to buy affordable properties.
On August 14, 2019, HUD published the long-awaiting condo rules; which went into effect on October 15, 2019. These rules reduce owner-occupancy requirements for some properties; raise commercial space limits; extend approval time frames; re-instate single-unit approval, and reduce the burdens of the re-certification process. NAR estimates this could provide up to 60,000 more condominum units for FHA buyers per year. NAR is now monitoring the implementation to ensure the program works as well as expected.
Federal Financing and Housing Policy Committee
None at this time
Issue Summary - FHA Condo Financing
Letters to Congress - FHA Condo Financing
Letters to federal agencies - FHA Condo Financing
Congressional testimonies- FHA Condo Financing
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Condos: The Basics
What is a Condo? 6 Different Types of Condos to Know (Rocket Mortgage, Mar. 8, 2022)
Condo owners are responsible for what goes on within their individual units, including maintenance and repairs. Beyond that, they’re required to pay regular fees to a condo association. Those fees contribute to the maintenance of the shared common areas, building amenities and the exterior of the complex.
7 Tips for Buying a Condo in 2022 (Bankrate, Jan. 3, 2022)
“Condos tend to work best for those comfortable with most of the aspects of apartment living, minus the built-in maintenance.”
An Introduction to Buying a Condominium (Investopedia, Sep. 23, 2021)
“Before purchasing a condo, it is advisable to request and read all the rules of the condominium complex.”
Build Equity and Ditch the Maintenance: The Pros and Cons of Buying a Condo (HomeLight, May 28, 2021)
“The quality of your HOA heavily influences your ability to sell a condo, so you’ll want to be sure to find one with a well-run, well-funded HOA to increase your chances of seamlessly reselling your unit in the future.”
Condo Buyer's Guide (Fannie Mae)
“Condos represent a community form of ownership. In addition to your monthly mortgage payment, local property taxes (in most areas), and insurance costs, you will pay a condo fee that may also be referred to as “homeowners’ association” (HOA) dues or fees.”
Home Owners Associations (HOAs) and Fees
What is a Homeowners Association, or HOA? (Bankrate, Apr. 4, 2022)
“An HOA, or homeowners association, is a self-governing organization in “common-interest” communities where homeowners collectively pay fees to maintain the units or neighborhood. HOAs are typically run by resident homeowners, unpaid volunteers who are elected to a board of directors that oversees the HOA’s management.”
What Is a Condominium Fee? (The Balance, Dec. 31, 2021)
“Condo owners are responsible for this fee, even if they are unhappy with the management of the property. If left unpaid, HOA organizations are able to place liens against the condo owner’s property.”
Why Steady, Low Condo Fees Should Raise a Flag – and Other Tips for Owners and Buyers (NPR, Jul. 19, 2021)
“We live in an economic environment where there's inflation every year, and so if a board isn't raising the homeowner assessments every year, then that's a tipoff that something is wrong.”
15 Cities With the Highest HOA Fees (Money Talks News, May 31, 2021)
“According to data from the U.S. Census Bureau, among homeowners with a mortgage who pay HOA fees, the median HOA fee is $290 per month and about 6% of homeowners pay them, but both the dollar amount and the proportion who pay vary widely across the country.”
The Condo Market
Fannie Mae and Freddie Mac Changes Make Selling a Condo More Difficult (Realty Biz News, Apr. 8, 2022)
“Condo sellers will begin feeling the effects very soon and probably even more than first-time buyers. Clearly, the new rules will cut deeply into the pool of potential buyers for their condos. Even if they resort to something as dramatic as seller financing, the value of their units is going to drop dramatically in price.”
Condo Prices Jump to Record High as Buyers Seek Relative Affordability (Redfin, Mar. 28, 2022)
“Now, with coronavirus cases declining and some Americans returning to the office, condos are an attractive option once again. “
Condos are Back! Here are the Cities Where They’ve Become the Hottest Thing in Real Estate (realtor.com®, Oct. 4, 2021)
As move-in ready, single-family homes have hit record-high prices—and record-low availabilities—many buyers are turning to their cheaper, oft-overlooked cousins: condominiums and townhouses. Sales of these units have exploded over the past year as people who could work from anywhere moved across the country or scooped up a second home to enjoy on vacations near the beach or the ski slopes.
Is That Condo Building Structurally Sound? (REALTOR® Magazine, Jul. 28, 2021)
“Urge buyers who identify or suspect red flags, either of a structural or a financial nature, to consult with a qualified expert before making a purchase.”
Condos v. Co-Ops: Why Condos Are Easier to Buy and Sell (Blocks & Lots, Jan. 20, 2021)
“The condo board will set rules for how you use property, but it does not have a veto over to whom you sell your property.”
New Condo Mortgage Rules Create Barriers for Borrowers (Bankrate, Mar. 7, 2022)
“If Fannie and Freddie won’t sign off on your condo loan, there is another option: Some lenders offer a type of mortgage known as a non-warrantable loan.”
Condo Loans: Defined and Explained (Rocket Mortgage, Feb. 27, 2022)
“For example, a bank determining whether to extend a condo loan to an applicant may wish to see the building’s proof of insurance, HOA meeting notes and budgets, and information regarding any current or future proposed special assessments (aka pending bills that will be levied against owners). That said, borrowers can apply for condo loans through the same programs as any other type of home.”
FHA Approved Condos: How to Find One (Credible, Oct. 11, 2021)
“According to the FHA, there are more than 150,000 condominium projects in the country, but only 6.5% of them qualify for FHA financing. However, with the more relaxed financing requirements, the FHA expects up to 70,000 units per year to become eligible for FHA loans.”
VA Loan Guaranty (United States Department of Veterans Affairs)
“After registering with AccessVA, you will be able to work in the new Loan Guaranty site”
FHA Approved Condos — Complete 2022 Guidelines and Updates (The Mortgage Report)
“FHA condominium guidelines are often stringent. It’s more difficult to get approved for a FHA loan on a condo than for a single-family home. Condos are more difficult to approve than detached homes because they are riskier for the FHA to insure. If one condo unit in a building goes to foreclosure, for instance, the value of all units in that building can potentially decline.”
Community Associations Institute
“CAI provides information, education and resources to the homeowner volunteers who govern communities and the professionals who support them. CAI members include association board members and other homeowner leaders, community managers, association management firms and other professionals who provide products and services to associations.”
Condominiums (United States Department of Housing and Urban Development) —
“The Condominiums page allows users to search for FHA-approved condominium projects by location, name, or status. These properties are not for sale by the FHA.” Search by city.
Institute of Real Estate Management
“Total of U.S. market managed by CPM members: Condos/Co-ops/HOAs – 13%.”
Living in a Housing Cooperative (National Association of Housing Cooperatives)
“As a democratic organization that follows the cooperative principles, cooperatives give you a voice in the operation of your cooperative. The rights and responsibilities of shareholders are outlined in the various cooperative documents, including the bylaws, occupancy agreement/proprietary lease, and articles of incorporation.”
Condo, Co-op, and Planned Unit Development (PUD) Eligibility (Fannie Mae)
“Step 1: Determine a Condo Project Review Type Step 2: Follow the Condo Project Review Type Requirements Step 3: Confirm the Condo Project Insurance Requirements”
Condominium Unit Mortgages (Freddie Mac)
“Who are Condominium Unit Mortgages for? Borrowers who want to purchase a qualifying condominium.”
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
The Complete Guide to Purchasing a Condo, Townhouse, or Apartment (eBook)
The Condominium Concept (eBook)
Condo Owner's Answer Book (eBook)
Financing Your Condo, Co-op, or Townhouse (eBook)
How to Buy a Condominium or Townhouse (eBook)
Make Money with Condominiums and Townhouses (eBook)
Tips & Traps When Buying A Condo, Co-Op, or Townhouse (eBook)
Your Dream Home: A Comprehensive Guide to Buying a House, Condo, or Co-op (eBook)
Books, Videos, Research Reports & More
As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.
Condos and Co-ops (Chicago, IL: Dearborn Real Estate Education, 2006) HD 1377 M48c
Everything You Need to Know Before Buying a Co-op, Condo, or Townhouse (New York, NY: AMACOM, 2006) HD 1341 R74
Condominiums: The Pros and Cons of Ownership (Port Orchard, WA: Windstorm Creative, 2005) HD 1377 L16
Make Money with Condominiums and Townhouses (Hoboken, NJ: John Wiley, 2003) HS 1377 E2
How to Invest in Condominiums: The Low-risk Option for Long-term Cash Flow (New York, NY: John Wiley & Sons, 2002) HD 1377 V81
The Condo and Co-op Handbook: A Comprehensive Guide to Buying and Owning a Condo or Co-op (New York, NY: Macmillan, USA, 1998) HD 1377 W86
How to Buy an Condominium or Townhome: with Sample Forms and Worksheets (Naperville, IL: Sourcebooks, 1997) HD 1377 Ir9
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