Chicago Condo Directory

February 2, 2010 - Just as a refresher, we thought we’d remind you of the new FHA mortgage rules that went into effect recently. One change just went live as of the first of February, and that is the elimination of the spot approval process. From now on FHA will no longer approve individual units. The entire condo building will have to be approved. There have been many buyers who got spot approval on a condo in a building that wasn’t FHA approved and that was the only way the sale was made.

It will take some time to see how they affect Chicago real estate sales, but there are some experts who believe the changes will have a negative impact on Chicago condo sales in particluar. The new rules won’t be applied to buildings already approved, just new developments wanting to apply for approval. We’ll list the main changes below.

At least 50% of the units in a building must be owner occupied. The old standard was 51%, so that’s not really an issue.

At least 50% of the units in a building have to be sold before FHA will even consider backing any mortgages in that building. Previously there was no sales benchmark set. And then FHA will only allow 30% of the condos in a building to have FHA loans. Again, there had been no limit on
the number of loans backed in one building.

With no more spot approval and a limit on the number of approved loans in one building, these new FHA mortgage rules may make it more difficult for some buyers to purchase Condos In Chicago.

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