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New Rules Could Make it Easier to Buy a Seattle Condo With an FHA Loan

A House resolution that was signed into law in 2016 could make it easier to buy a condo in Seattle with an FHA loan. That is, if HUD actually implements those rule changes. It seems there have been some delays. And some members of Congress are tired of waiting.

Housing Opportunity Through Modernization Act

This story began a couple of years back, in 2016. That’s when House Resolution 3700 was signed into law, after clearing both the House and Senate. Among other things, H.R. 3700 (a.k.a., the “Housing Opportunity Through Modernization Act of 2016”) was meant to streamline the condo approval process for FHA loans. This in turn could increase the number of properties available for purchase under this program.

That’s all well and good. But it’s ultimately up to the Department of Housing and Urban Development (HUD) to implement any policy or rule changes relating to the FHA loan program. And apparently, they’ve been dragging their feet on this one. That’s why a law that was passed in 2016 has yet to be implemented.

Clearly, some members in Congress have had enough. In June 2018, dozens of senators sent a letter to Ben Carson, the current HUD Secretary. In it, they urged him to expedite the FHA rule change relating to condominium approvals.

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A Rule Change for Seattle FHA-Approved Condos

But let’s back up a minute. What is H.R. 3700 supposed to do? And how might it affect condo buyers in Seattle, and elsewhere in Washington?

Section 301 of this legislation states the following:

“This title amends the National Housing Act to require the FHA to modify its certification requirements for condominium mortgage insurance to make recertifications substantially less burdensome than original certifications. The FHA must consider lengthening the time between certifications for approved properties and allowing information to be updated rather than resubmitted.”

Buy Seattle Condo With FHA LoanSo the goal of this resolution is to make it easier for condominium units to get onto — and stay on — the list of approved condos. If you buy a condo in Seattle with an FHA loan, you have to ensure that the project is listed on HUD’s approved condos list. You can search this database on

Streamlining the certification process would, in theory, increase the number of condo units in Seattle that are approved for purchase with an FHA-insured mortgage loan.

Related: Conventional loans competing with FHA?

Congress’s Letter to HUD

On June 12, 2018, more than half the members of the U.S. Senate drafted a letter to Dr. Carson at HUD. The 52 senators expressed their strong desire to see this rule implemented, at long last.

Here’s an excerpt from that letter:

“the Housing Opportunity Through Modernization Act … makes a number of changes to the Federal Housing Administration’s (FHA) condominium rules that would streamline and simplify requirements for condominium buildings to qualify for FHA approval … Unfortunately, nearly two years later, the final rules has yet to be issued.”

The letter also points to some of the red-tape issues that were mentioned earlier. It states:

“FHA’s current condominium rules place significant restrictions on the purchase and sale of condominiums, even though they are the most affordable homeownership option for first-time buyers, small families, urban and older Americans.”

With more than half of the U.S. Senate behind it, this letter carries a bit of weight. So perhaps we will soon see an official policy change handed down by HUD, which in turn might make it easier to buy a condo in Seattle with an FHA loan. Better late than never.

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