New FHA Rule to Help Condo Sales

In September, the FHA approved a rule change that permits government-insured mortgages for condos in mixed-use buildings containing commercial of up to 35 percent. That’s up from a previous 25 percent limit. But the FHA says it may even be willing to grant exceptions to projects that have as much as half of their space designated as commercial.

“We’ve learned that this mixing of development makes for a better urban design, so towns and cities are designing codes to encourage it, and the market is showing interest,” says John K. McIlwain, a senior resident fellow at the Urban Land Institute. “We’re going to see a lot more mixed use, whether it’s in the urban central city or suburban town centers.”

Also among some of its recent changes effective this September, the FHA has recently increased the number of units that investors can own in a development to 50 percent — that’s compared to 10 percent previously. However, the rest of the building must be owner-occupied.


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Alfy Sprenger, Principal Broker
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