If you are buying a Chicago condominium in the near future, there’s good news – the Federal Housing Administration is going to make mortgages easier to approve for these purchases. This is encouraging for first-time home buyers who found themselves practically locked out of the market in the past.
First-time buyers aren’t limited to FHA mortgages, but these loans are often the first choice since their credit score requirements and debt-to-income thresholds are a bit easier to reach. In the past, these advantages were quickly negated for condo buyers, because FHA loans only approved a condo purchase if the entire building was FHA-approved. The approval process wasn’t something that condo associations enjoyed going through, and consequently, only a fraction of Chicago’s condo units were eligible for FHA financing.
As of October 15, 2019, individual condo units will be eligible for FHA mortgages, regardless of the building’s FHA status. This is going to open up more choices for first-time Chicago home buyers, and any other home buyers relying on an FHA mortgage!
Another gem: the ratio of owner-occupied vs. renter occupied units can now be as high as 50% within the building. In the past, renter-occupied units couldn’t exceed 35% of the building. Condo units located in mixed-use buildings will now be eligible for FHA approval as well. These are long-overdue improvements to FHA policy that should provide more choices to buyers.
Of course, there is a caveat. There is a limit to how many condo units the FHA will approve for mortgage financing in any one building. This essentially protects the FHA from taking on a disproportionate amount of risk within a condo development.
There are still pros and cons to FHA mortgages, and home buyers should keep their options open while comparing mortgage offers. When you’re ready to find a mortgage lender, let us know! We’ll be happy to refer you to trustworthy Chicago area lenders.
StartingPoint Realty – helping first-time home buyers since 2004!
StartingPoint Realty specializes in serving first-time home buyers throughout Chicago and the Northwest suburbs. We provide complete education and guidance during the entire home buying process! Attend a free home buying seminar to get started!
We provide a number of terrific resources to help you become a successful home buyer! Check out our list of home buyer assistance programs on our website!
Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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