PITTSBURG (CBS 5) — For folks looking to break into the condominium market over the past 18 months, it’s been next to impossible. The only way to take advantage of low interest rates and foreclosure prices was to put at least 20 percent down.
But changes to a federal policy means the condo market is back in business.
Tara Stokes said she decided to buy a new unit at the Vidrio complex in downtown Pittsburg. But it turns out the complex was not approved by the Federal Housing Administration (FHA). Loans that are FHA approved allow borrowers to buy with as little as a 3.5 percent down payment.
Mortgage broker Faramarz Mooen-Ziai explained condo buyers are often first-time homebuyers who can’t afford to put a 20 percent down payment.
“After the downturn in banking we saw a lot of those options for people with low down payments go away,” she said. “The only thing left was FHA.”
Until recently, The Federal Housing Administration stopped approving condo loans due to risk factors in the struggling housing market. The FHA has now rewritten the condominium guidelines, slowly getting more loans approved. Mooen-Ziai has also worked with the City of Pittsburg to secure FHA approval on the Vidrio complex which allowed Stokes to qualify for a new loan as a first-time homebuyer.
But that’s not the only benefit to an FHA loan. Guidelines are stricter said broker Rick Olson. “If FHA approves it, odds are, the condo is a solid project,” he said.
The U.S. Department of Housing and Urban Development has provided a list of qualifying condominium complexes at https://entp.hud.gov/idapp/html/condlook.cfm.