The Perrie, a new residential building in Turtle Bay, is the first luxury condominium complex in Midtown to meet the requirements for FHA financing — an unconventional move for Manhattan condos.

FHA loans are designed for homebuyers who have imperfect credit, can’t afford a 20 percent down payment, or both. That’s not your typical Manhattan buyer.

But FHA loans in high-cost areas such as Manhattan can be up to $1.15 million. The Perrie’s 95 apartments — all one-bedrooms, including the five penthouses — start at $875,000 and three-quarters are priced below $1.2 million. Sales launched this month at the 234 East 46th Street building.

The average new development one-bedroom in Manhattan is priced around $1.345 million. The Perrie’s developer, Craig Wood’s Cape Advisors, believes the decision to price units within reach of FHA borrowers will make ownership more accessible for people with healthy incomes but little savings.

FHA loans appeal particularly to first-time buyers because they allow low down payments and lower credit scores, while offering lower interest rates. Last week, 30-year jumbo FHA loans averaged 6.12 percent versus 6.41 percent for traditional jumbo loans. There is no income cap for FHA loan applicants.

But because FHA loans have a higher risk of default, they come with additional costs such as private mortgage insurance, which can add hundreds of dollars to a monthly mortgage payment.

Douglas Wagner, director of brokerage services at BOND New York, which is not involved in the Perrie, said the condo’s FHA eligibility is a good opportunity but for a very limited audience.

“It’s still going to be really high-income people who are going to go for those [units],” he said. “It doesn’t really embrace the market that the FHA was created to support.”

FHA loans make up about 15 percent of the U.S. home mortgage market, but 31 percent of them last year went to borrowers of color. Black Americans’ homeownership rate is 45 percent, compared with 75 percent for white Americans.

Wagner is skeptical that FHA financing will expand access to those who normally cannot buy newly built units in Manhattan.

“This will not do anything to eliminate disparate impact,” he said. “The prices of comparable condos in this area are going to remain high.”

Wagner also noted that because of the high development costs in the neighborhood, projects don’t pencil out for developers if they price units low.

But the Perrie’s team is not concerned. “We’ve underwritten the project where we believe it makes sense for us and our investors,” said the project’s sales director, Nick Riback.

For a building to be eligible for FHA financing, fewer than half of the units can be investor-owned and no more than half of the property can be commercial space.

Jared Antin, a managing director at Elegran, said that more luxury condominium complexes may seek to obtain FHA eligibility, depending on the price points of the units and the target market.

“Anything that the developer can do that helps increase the amount of potential buyers,” he said.

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This article originally appeared on The Real Deal. Click here to read the full story.

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