Fannie Mae Updates Condo Financing Requirements
In its attempt to stabilize the housing market by increasing investor confidence, Fannie Mae has tightened up a bit on its requirements for loans that it will buy. Since most lenders sell the loans they generate, and since Fannie Mae buys the majority of housing loans, they set the gold standard. If a loan can be found with less stringent requirements, it will typically cost more in terms of loan fees and interest rate. So, changes made by Fannie Mae are extremely important to the markets and have a huge impact on an individuals ability to get a loan on a specific home. Condos have been hit very hard in the current downturn, so it makes sense for Fannie Mae to review its requirements in an attempt to make new condo loans safer investments. Why does a buyer need to know anything about the requirements? Its simple. It is very disappointing to quick house sale find a home you love and then find out that you cant get a loan on it. Standards are different for established and new projects, but the guidelines that follow are the basics, and apply to both condo classes unless noted otherwise. New projects require 70% to be presold established projects require 70% owner occupancy. All projects require fidelity insurance this covers the value of the associations reserve and active funds. No more than 10% of the project can be owned by a single entity. No more than 20% of the project can consist of non-residential space. Dues delinquency rates can be no more than 15%. Borrowers must have individual insurance on their specific portion of the project. The condo association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible.