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According to Amy Webb the Sales & Marketing Director at Elite Lending, “The FHA Condo Eligibility is Good News for Hawaii.” Read the article below with her valuable insight on the recent changes in the FHA rules, how they will affect us, and the new and exciting doors it will open for Maui…

Buying a condo is a lot like buying a “home” but with one important difference, mortgages can be tougher to come by. When you’re buying a condo, lenders impose a different set of rules on you, and may sometimes charge a higher interest rate.

For years, mainland lenders have had difficulty understanding the unique properties here on the island. As a top destination resort community, many condos on Maui are classified as “non-warrantable” for financing simply because of a low occupancy of full-time resident homeowners. Non-warrantable condos are more challenging to borrow against and do not qualify for conventional financing, FHA, VA, or other government loan programs.

Recent improvements to FHA’s condo eligibility criteria is excellent news for Hawaii residents, especially young, first-time buyers and for seniors who own condo units and need a reverse mortgage to supplement their post-retirement incomes.

Here’s Why: FHA financing offers not only 3.5 percent minimum down payments (which can be gift funds) but is far more lenient than other loan programs on crucial issues such as credit scores and debt- to-income ratios. Borrowers can be approved with less than perfect credit.

But if a condo building is not certified as eligible for financing by FHA, all the individual units in the project are also ineligible for FHA mortgage financing. Families can’t buy using FHA loans, homeowners can’t refinance with an FHA loan, and seniors can’t tap their equity through a reverse mortgage.

Last month FHA changed their condo approval guidelines, opening the door to the possibility of more FHA approved condo complexes on Maui for homebuyers seeking FHA financing. The new changes simplify controversial certification procedures for condo buildings and amend other rules that have knocked thousands of condominium buildings out of eligibility. FHA once financed 80,000 to 90,000 condo units annually, but last year’s volume fell below 23,000.

Highlights include:

 Reduces the FHA condo owner occupancy ratio from 50% to 35%, unless FHA takes alternative action within 90 days.

 Directs FHA to streamline the condo re-certification process.  Provides more flexibility for mixed use buildings.

Prior to the news breaking about FHA’s improved eligibility criteria, Rebecca Ross, President at Elite Lending, and I completed the application process to secure an FHA Approval for the highly desirable condo community of Iliahi at Kehalani. The process was indeed challenging, and in the end we were able to secure the approval which opens a new door to affordable home ownership to Maui residents.

There are a number of benefits that come with an FHA financing for both potential homebuyers and current homeowners. To take advantage of this opportunity, please contact either of us to learn more. Elite Lending is a full service mortgage bank and brokerage celebrating an impeccable reputation for 20 years of lending on Maui.

Aloha, Amy

Amy Webb Headshot

Amy Webb, Sales and Marketing Director 808-283-6087

1 Headshot Rebecca Ross 180x180

Rebecca Ross, President 808-250-6482

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