NEW Fannie Mae and FHA Condo Financing Changes

Fannie Mae and FHA has made some changes to their condo financing. The change are highlighted below. Keep in mind that these are the guidelines that Fannie Mae and FHA is allowing. Each lender may have overlays on top of the guidelines making the financing more restrictive. Our guidelines tend to mirror what Fannie Mae and other investors will allow and as such, these changes apply to condominium financing that we provide. These changes should occur within the next 30 days.

FHA Changes:
1. Eliminated the requirement that no more than 10% of the units can be owned by a single person or entity. The max is 50%, since 50% of the units must be owner occupied.
2. Has changed the delinquency requirement that no more than 15% of the units owners can be no more than 30 days delinquent on their association dues. The new guideline is that no more than 15% of the unit owners can be more than 60 days delinquent.
3. The max allowable commercial space of 25% to include the “work” portion of live/work units. Exceptions can be made up to 35% with full project submission.
4. New construction condo’s now allowed with a lower presale requirement of 30%.

Fannie Mae and Freddie Mac:
1. No appraisal waivers allowed. All condo’s will now require a full condo appraisal.
2. Limited condo review is now allowed for established condo projects (100% full complete, essentially sold out projects). It is now allowed on owner occupied purchases with a loan to value of 80% or less or a combined loan to value of 80% or less ( applies if there is a second mortgage, the combined 1st and 2nd mortgage cannot exceed 80%).