Are you Buying or Selling a Condominium?
Worried that you don’t meet the old rule of 50% owner occupancy rate?
Worry no longer!!
As long as you purchasing your new condo with the intent to occupy this condo as your Primary Residence, Fannie Mae no longer requires a specific occupancy rate in order to obtain a mortgage on the property. You can put down as little as 5% and in some cases even as low as 3% down payment.
This rule still applies for FHA and for Mass Housing Loans, they both still require that the complex has 50% or greater of owners compared to renters. These are very important to know when shopping for a mortgage and a home.
Here is the fine print taken from the FNMA guidelines
For investment property transactions on attached units in established projects (including two- to four-unit projects), at least 50% of the total units in the project must be conveyed to principal residence or second home purchasers. This requirement does not apply if the subject mortgage is for a principal residence or second home. Financial institution-owned REO units that are for sale (not rented) are considered owner-occupied when calculating the 50% owner-occupancy ratio requirement.
Here is what Lenders are looking at
Condo Fees: No more than 15% of the total units in a project may be 60 days or more past due on their common expense assessments (also known as HOA dues). For example, a 100–unit project may not have more than 15 units that are 60 days or more past due.
10% Reserves: Lenders must review the HOA projected budget to determine that it provides for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget.
To determine whether the association has a minimum annual budgeted replacement reserve allocation of 10%, the lender must divide the annual budgeted replacement reserve allocation by the association’s annual budgeted assessment income (which includes regular common expense fees).
The traditional requirements and regulations still apply. This link will take you directly to the Fannie Mae website of guidelines.
For more information about purchasing a Condo, Single or Multi Family, feel free to call me at 978-273-3227 or email me.