New condo rules from the Federal Housing Administration could allow for the financing of an additional 60,000 condo loans each year.

Currently, of the more than 150,000 condo projects across the country, only 6.5% are approved for FHA financing.

The FHA has finally issued a long-awaited update to its condominium rules, announcing earlier in August that it will now allow individual unit approval and is taking other steps to loosen requirements that make these properties eligible for FHA financing.

Under the revised guidelines – which take effect Oct. 15, 2019 – an individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured. For units in buildings with fewer than 10 units, no more than two units can have FHA insurance.

Now, a new report from Moody’s says these guidelines are credit positive for the state of housing finance agencies because it will increase the supply of affordable single-family housing that HFAs will be able to finance, potentially increasing their revenue.

Moody’s explained that the revised rules introduce a new single-unit approval process which makes certain individual condo units eligible for FHA mortgage insurance even if the building as a whole is not certified by the FHA.

Under the new guidelines, FHA will be able to approve loans for single condo units up to 10% of any uncertified building with 10 or more units. For FHA-certified buildings, up to 75% of units will now be eligible for FHA-insured loans, up from 50%.

“The new guidelines will benefit many HFAs, especially those in high-priced states, by expanding the availability of condos for their core market: first-time homebuyers,” Moody’s stated. “The resulting increase in loan originations, a credit positive for HFAs, will translate into increased revenue and balance sheet assets, while allowing HFAs to continue delivering on their affordable housing mission. At the same time, the increased demand should help to alleviate the overall lack of affordable housing supply, which continues to constrain HFA loan production.”