Fannie Mae Condominium Owner Occupancy Ratio Requirements.

Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

With so many Condominium Complex not re-certifying with FHA, and as a result no longer on the FHA Approved Condo List, more buyers are trying to purchase condominiums with Conventional Mortgages.  Because of this I have been getting more and more questions about what the Fannie Mae Condominium Owner Occupancy Ratio Requirements are. 

The ratio between condos that are owner occupied and those non-owner occupied (rentals) have always been very important for both FHA and Fannie Mae, and in the past have been the reason for many low price condos not being able to obtain financing.  The reason for that is that the lower the price of the condo, the more that it is attractive to investors, because they can get a very good rate of return on their investment.

Because of so many Condominium Complex not re-certifying with FHA, Fannie Mae loans have become more attractive because Fannie Mae does not have certification requirements like FHA.  Each Condo basically stands on its own, and just has to go through a Spot Approval Process.

In the past Fannie Mae required that all established condominium project consisting of attached units have an owner/investor occupancy ratio of at least 51% at the time the loan is originated for a purchase or refinance.  However, because of market conditions that Fannie Mae started to identify back in 2008, Fannie Mae has made modifications to the Fannie Mae Condominium Owner Occupancy Ratio Requirements.

Presently Fannie Mae only requires that the owner/investor occupancy ratio be 51% IF the mortgage is going to be an investment loan (non-owner occupied).  But if the condominium is an existing condominium complex, and the Borrower is going to occupy the unit, or use the unit as a second home, there are NO owner/investor ratios.  This is a huge change, and makes finance obtainable for many Condominium Complexes that could not get financing before.

Fannie Mae also recognizes that many Condominium Complexes are experiencing a higher number of Real Estate Owned (REO) Units.  So Fannie Mae has further changed Fannie Mae Condominium Owner Occupancy Ratio Requirements to allow REO units that are on the market for sale as owner occupied units (not rented) to be counted as owner occupied units in the owner/investor ratio.  Again this is a huge change, and one that benefits those trying to obtain investor financing.

These changes have been around believe it or not since 2008, but overlooked by many Loan Originators, and as a result have not been made known to Realtors.  These Fannie Mae Condominium Owner Occupancy Ratio Requirements change should make it much easier for Realtors to move some of those low end condominiums that they thought they could not obtain financing for.  Now that the 51% owner/investor occupancy ratio no longer exists for owner occupied units, and has been altered in the way that it is calculated for non-owner occupied units, there is no reason to for not getting these listing sold.



Who To Call For Your Mortgage Needs In Connecticut:

George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308, or visit my McCue Mortgage Homepage.

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George Souto NMLS# 65149 is a Loan Originator who is licensed in #CT, #RI, #MA, #NH, & #FL and can assist you with all your #FHA, #Conventional, #VA, #USDA, and #State Bonded Progam #mortgage needs in #CT, #RI, #MA, #NH, & #FL. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or


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Winston Heverly
Winston Realty, Inc. - Atlantis, FL

I wonder how many will sit there unoccupied when the ratio runs over. I see more investor buying than O/C.

Jul 13, 2012 11:58 AM #1
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

George - this is very interesting.  I had no idea.  Just wondering what is required regarding resevers, master insurance policy limits and/or a fidelity bond for the Fannie vs. Fha.

Jul 13, 2012 12:15 PM #2
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George, this is good news, but there will still be the issue of buyers coming up with the extra down payment needed for a conventional loan

Jul 13, 2012 12:36 PM #3
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Winston, that is what is good about the change, there is no ratio, so no ratio to go over.

Joan, there isn't any automatic reserve requirement, but they do need to be concerned about getting PMI, and insurance and fidelity bond is the same for both Fannie and FHA.

Ed, the condo's that will benefit from this are the low price condo's, those that sell for between $40,000 to $80,000.  Condo's in that price range are the ones that normally have Owner to Investor ratio issues, and at that price downpayment could still be an issue, but should not be a huge issue.

Jul 13, 2012 01:10 PM #4
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

I have had better luck doing my conventional condo loan with a Freddie Mac lender. For whatever reason, their guidelines seem to be less restrictive.

Jul 13, 2012 08:55 PM #5
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

George - This is news to me.  Thank you for keeping me informed on the mortgage world.  You are my main source of info.

Jul 13, 2012 10:52 PM #6
Kim Boekholder Utah Real Estate
Results Real Estate 801.580.5624 - Draper, UT
Broker, Results Real Estate
Thank you for always keeping us up to date. I appreciate it a lot. This does change a buyers options
Jul 14, 2012 12:10 AM #7
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY

In Manhattan, this type of situation of owner occupancy requirements plays a huge role in our market.  There are a lot of condo buildings that are very prime desirable buildings but because of a large non owner occuppied profile they are hard to obtain financing. 

Jul 14, 2012 11:37 PM #8
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Many condo developments entered a death spiral because of owner occupant ratios. As owner occupant loans got turned down, only investors bought units cheap, which lowered the ratios even more.

Jul 05, 2017 08:02 PM #9
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