Prior to 2008, condominium developers could rely on private mortgage insurance to bridge the financing gap for condo buyers who couldn’t put together a 20% or larger down payment. That all ended with the financial collapse in 2008-09. Since then, condominium sellers have had a very difficult time getting a buyer financed if the buyer lacked a large down payment, even if the buyer had excellent credit.
Since 2008, condominium associations have increasingly ensured that their condominium developments are approved by the Federal Housing Administration (FHA) so that unit buyers can obtain FHA-insured loans. As an FHA-approved condominium development, unit sellers are happy because buyers can then qualify for FHA-insured acquisition financing. The FHA’s low down payment requirements are especially attractive to potential buyers.
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