Getting a mortgage for individual condominium units has not been easy recently, mainly because the Federal Housing Authority had strict, and some would say harsh, rules in place. This meant that thousands of buildings all over the country were not eligible for FHA financing.
New guidelines issued in September for immediate implementation should make it easier for many condo associations to get certified by the FHA, which is a mortgage insurance agency run by the government. The previous rules required the whole project for a condominium development to be approved, whether it was a huge high-rise in the center of a city or a smaller development out in the suburbs. This included the project's financial, legal and physical status, and unless it was given the go-ahead then no individual unit could be financed or refinanced using an FHA mortgage.
The old rules also made it impossible to get units insured through the FHA if over 25% of the overall floor space was given over to non-residential or commercial uses. This meant that properties in many urban areas of states such as Florida found they were not eligible for FHA financing for their residents, as revenues to help support the whole project were derived for space given over to offices and retail stores on lower floors.
The revised rules now permit exceptions for commercial use of up to 35%, with an additional case-by-case provision that could gain exception of up to 50% or more.
