Federal Housing Authority (FHA) financing changes make it easier for people to obtain financing to purchase homes.
How?
It’s a fact that FHA backed mortgages need a smaller down payment. With FHA, your down payment can be as little as 3.5%. However, you must pay for mortgage insurance. Why? Because this protects the lender if the buyer defaults on the loan. With conventional financing, the typical down payment is 20% or more. And some conventional buyers can get lower down payment financing. And this would also require Private Mortgage Insurance. However, it’s usually more cost effective to use FHA financing. Additionally, quite often FHA rates are better. In addition, the qualification requirements are more flexible. Also, you can qualify with a lower credit score than with many conventional financing programs.
However, a new law was passed. As a result, it will soon be easier to obtain FHA financing.The National Association of Realtors has been supporting this bill.
All single family detached homes are eligible for FHA financing. However, for FHA Financing, condo complexes must be approved. Even so, renewing an expired approval is time consuming and costly. Therefore, many condominium associations have not gone through the process. The new laws will streamline the process, thus making it easier and less costly for a condo complex to gain approval. Under previous regulations, 50% of an association’s owners must also be occupants. Among the changes, this will be reduced to 35%
These changes will also affect active adult communities. And that’s because many of the active adult communities are condominiums. Thus they require FHA financing approval. Veterans Authority mortgages follow many of the FHA rules.
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