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I have a question regarding buyers' financing and condos and owner vs. renter percentages. I have heard many lenders require above a certain owner-occupied percentage in condo units, like 75% owner-occupied, or something along those lines. I've seen mixed info on various sites online, so can someone here clarify this issue?
A woman I know is trying to sell her unit in a condo complex with about 160 units, with about 39% of them currently rented. She is a little worried potential buyers might have trouble obtaining financing because of the rather high percent of rented units versus owner-occupied ones. or does this pertain to only certain kinds of financing? I am not really sure...
Ok, thanks for posting this...so, this says FHA requires 50% owner-occupied.
For things like conventional loans, isn't the percentage different? I have read no more than either 20 or 25 percent of the units can be rented/investor owned for some banks to approve the loan---is this amount fixed or do various lenders have different requirements on this?
For some fun reading, go here to this late Feb news from FNMA and page down just a little to Full Review Eligibility Requirements for Attached Condos. Read some there but click also on the blue B4-2.1-02 Ineligible Projects note listed near that title.
That addresses the ineligible characteristics...percentage of condos past due in a community, budget reviews, even meters. Investment loan ... at least 50% should be residences or second homes; non residential or commercial in there can be up to 25%; one entity can own up to 10%. Also ineligible notes would be HOA named in litigation. I think here and I know Freddie Mac there is allowed only a small percentage of unpaid assessments.
I have a question regarding buyers' financing and condos and owner vs. renter percentages. I have heard many lenders require above a certain owner-occupied percentage in condo units, like 75% owner-occupied, or something along those lines. I've seen mixed info on various sites online, so can someone here clarify this issue?
A woman I know is trying to sell her unit in a condo complex with about 160 units, with about 39% of them currently rented. She is a little worried potential buyers might have trouble obtaining financing because of the rather high percent of rented units versus owner-occupied ones. or does this pertain to only certain kinds of financing? I am not really sure...
Much appreciated!
Chances are if she sells to an owner occupant (and not an investor) all will be fine. Fannie Mae has several ways to approve the condo. There's PERS, a full project review, expensive and typically performed on new construction, an then there is Condo Project Manager or CPM. Only the underwriter has access to CPM and it can only be run once the appraisal is back and the parameters of the loan known. You could have 60% non occupant owners and get a CPM approval. And then, if all else fails, the borrower can pay $200 to Fannie Mae and apply for a waiver. Fannie only will offer waivers for owner occupied units.
Tell your friend to stick to owner occupant buyers for greater success.
I've sold plenty of condos in associations that have low rates of owner occupancy. People can certainly still get mortgages. You can even sell to non-cash investors. Go around to some small local banks and some local credit unions and ask at the lending desk if they do "portfolio" lending. Specificy that the property is non-warrantable. If they say "no problem, we do that!" take their card. Make a list of those lenders and give them to any buyer who walks in the door. You'll have a lot fewer headaches than if you have to deal with a buyer who goes to Bank of America to get a loan and 3 months later they deny it because they're slow and generally don't think of these things up front before they waste everyone's time.
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