FHA Loosens Restrictions – Good News for First-Time Buyers

The housing recovery seems to be on it’s way in certain parts of the country, according to the National Association of Realtors. Areas of the country that have seen a steady increase in pending sales are in the southern and mid-west regions with a strong rise October over September.  Improvement in the job creation arena as well as an increase in consumer confidence has contributed to good housing affordability conditions.  Pending homes sales are at the highest level since March of 2007.

The Federal Housing Finance Agency has announce that the existing jumbo mortgage limits will remain at existing levels in 2013.  Presently the loan limits are $417,000 – 625,500 depending on the area of the country.  The Housing and Economic Recovery Act of 2008 (HERA) establishes rules for creating loan limits each year based on median home values.
FHA is also making some changes to their buying rules for condos which will stimulate buying in mixed-used developments and help revive condo sales. In the past the commercial percentage of owners in a mixed-use development had to be 25% or less in order to qualify for an FHA backed mortgage product.  That percentage has been increased to 35% and in some cases it could go as high as 50%.  This is good news for first-time home buyers who only need to put down 3.5% for an FHA mortgage.
FHA has also changed the percentage of investor owned units in a development from 10% to 50%.  50% of the units must be owned by owner occupants.

All of these changes within the federal housing agencies are favorable for continued growth in the housing market for condos whether in mixed use developments or condo residential developments.

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