FHA-backed loans require 3.5% down payments, versus 20% for conventional mortgages. But, no buyer can get an FHA loan for a condo under the existing guidelines unless the entire condo is FHA-certified. The current rules also prevented some from refinancing into FHA-backed reverse mortgages.
With the new guidelines, effective October 15, condo units will be eligible, on a case-by-case basis, if 10% of the building or less is FHA-insured. The FHA said the updated measures will widen affordability for first-time buyers, retirees and minorities.