Condo Owner To Investor Ratio Requirements

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


This blog was inspired by a blog Dick Greenberg posted last Thursday titled "TBT - A Bad Times Flashback".  The blog was about a bad experience Dick recently had with a "non-warrantable condo".  There are many reasons for why a condo might be considered a "non-warrantable condo", but one of of the more common reasons why a condo is considered a "non-warrantable condo" is because of the Condo Owner To Investor Ratio Requirements.

Depending on the Loan Program generally at least 51% of the condos in a condominium complex have to be owner occupied.  However, because of all the issues the Housing Industry went through after 2006, in 2008 Fannie Mae made an exception to their Condo Owner To Investor Ratio Requirements rule, and eliminated their Condo Owner To Investor Ratio Requirements.  This exception is still in effect today. 

The ratio between condos that are owner occupied and those non-owner occupied (rentals) have always been a problem for lower price condos not being able to obtain financing.  The reason for this is that the lower the price of the condo, the more it is attractive to investors, because they can get a very good rate of return on their investment.  As more and more condos in a complex are purchased by investors, the investor ratio goes up, and prior the Fannie Mae's exception, once the investor ratio went over 50% the condo became a "non-warrantable condo".

Besides no longer having a owner to investor ratio, Fannie Mae also has an advantage over other loan programs like VA, and FHA who require a whole condo complex to be certified and be on their approved condo list.  Fannie Mae does not have certification requirements like VA and FHA.  Each Condo basically stands on its own, and just has to go through a Spot Approval Process.

Presently Fannie Mae only requires the owner to 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 to investor ratios.  The Fannie Mae 2008 exception was a huge change, and made finance obtainable for many Condominium Complexes.

Fannie Mae also recognized many Condominium Complexes were experiencing a higher number of Real Estate Owned (REO) Units.  So in  2008 Fannie Mae further changed Condominium Owner Occupancy Ratio Requirements to allow REO units on the market for sale as owner occupied units (not rented) to be counted as owner occupied units in the owner to investor ratio.  Again this was a huge change, and one that benefits those trying to obtain financing in a condo complex with a high owner to investor ratio.

Unfortunately not all Loan Originators are created equal and are not aware of these changes.  In fact there are Lenders and Underwriters who are not aware of these changes, and as a result loans that should be approved are not.

As I mentioned at the beginning of the blog their are many reasons why a condo might be might be considered a "non-warrantable condo", and in Dick Greenberg situation there were additional reasons why the condo was considered "non-warrantable".  However, Fannie Mae's elimination of their Condo Owner To Investor Ratio Requirements, has eliminated one of the big obstacles in obtaining financing for a condo complex with a high number of investor owned condos.



 Info about the author:

George Souto NMLS# 65149 is a Loan Originator 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, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or

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 Info about the author:

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


Re-Blogged 1 time:

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  1. Gabe Sanders 08/14/2016 04:45 PM
Mortgage / Finance
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owner occupancy ratio requirments

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Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

There are many fine condo complexes in our area where the recent troubles have mad it difficult for a government loan.  This should help a lot of first time buyers

Jul 31, 2016 10:26 AM #1
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi George - Good explanation and as you mentioned, we faced another issue as well that generated the non-warrantable situation. Fortunately, we have some excellent lenders here who were able to find workable solutions, among them Fannie Mae.

Jul 31, 2016 10:42 AM #2
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

We were having such problems with our condos qualifying for financing that many of the complexes went through a conversion process to change them to a horizontal regime (PUD). That has been a lifesaver when it comes to financing. We no longer have roadblocks.

Jul 31, 2016 10:45 AM #3
Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

It would always be good to check this information before submitting an offer.

Jul 31, 2016 11:15 AM #4
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

One of the smarter moves to correcting the knee-jerk reactions the Fed had on housing George Souto 

Jul 31, 2016 12:30 PM #5
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

This was indeed good news for condo sellers.  Usual requirements here for associations that allow rentals is a minimum of 1 year leases.

Jul 31, 2016 01:30 PM #6
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Great post George, yes those Ratios can be Deal Killers if the Condominiums do not have the right ratios, Endre

Jul 31, 2016 04:53 PM #7
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Interesting, George.  I know that many condo loans are still being denied here in FL for this ratio.

Jul 31, 2016 09:49 PM #8
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty

Out here it all depends upon the HOA that is in charge of the Condo complex. Some Condo complexes don't allow investors at all. 

Aug 01, 2016 01:15 AM #9
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

George, your quote: "As more and more condos in a complex are purchased by investors, the owner to investor ratio goes up..."

am I reading this right?

Aug 01, 2016 02:13 AM #10
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi George - I had heard that before.  I think that enabled my daughter to sell her condo to an investor.

Aug 01, 2016 10:50 AM #11
Randy Mitchelson,APR
Marketing Coach & Homeland Heroes Home Loans - Bonita Springs, FL
First Impressions are made at First Click

Very insightful information that has changed over the course of time and very relevant to the southwest Florida market which was ground zero for condo conversions during the boom pre 2007.

Aug 01, 2016 02:29 PM #12
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great update, George. This is a very confusing issue for many condo buyers (and often for their agents, as well).

Aug 02, 2016 05:12 AM #13
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