There have been two important updates to FHA guidelines this year. The first change is related to underwriting for borrowers with lower credit scores and higher debt to income ratios. The second deals with the condominium approval process. These changes will impact certain buyers and investors.
The reason behind these guideline changes is twofold. The low credit score guidelines are intended to reduce the FHA’s risk, while the condo project approval process guidelines are intended to help address the affordable housing crisis. From the buyer / investor perspective, the new guidelines could make it more difficult for some higher risk borrowers to get a loan while making it easier for qualified borrowers to buy a condominium.
In my article I review what is included in the guidelines, followed by additional thoughts on what these two updates could mean for homebuyers and investors.