Yes you can still sell, but your buyer will not be able to get FHA financing. Good luck.

The information in this answer provided by Attorney Ranj Mohip is general information and is not intended as legal advice, nor does the attorney intend to create an attorney-client relationship with any reader by answering this question or otherwise contributing as a member of Trulia.com.

what if my building has a total of 12 units; 6 owner occupied, 3 renters, and 3 for sale by owner but the owner is not living in the unit. Are those 3 considered owner occupied?

Would the building meet the 50% ratio?

Cash. Sell for cash and avoid that issue. No bank. No appraisal.

Besides selling your property to a buyer with conventional financing, you might want to also consider some creative options. For example, if any of the other owners are landlords, then you might consider approaching one of them to see if s/he might be interested in buying your property.

Price cures EVERYTHING. Period.

Lenders.... Can a buyer get a conventional loan with 10% down and the seller paying lump sum mortgage insurance for the buyer, so it approaches FHA loan in the down payment department?

An owner occupied buyer or second home buyer will be able to purchase your home. Use a company that specializes in condo purchases if possible, because if a buyer comes in with a lender who is not an expert in condo lending they will get mis information. Urge your association to not allow any more rentals in your building, it should have been capped at 50%. Wintrust is a Delegated Condo Lender so feel free to reach out to me if you have any additional questions. We are a few minutes from your location in the 60613 zip code.

Christine DePaepe
Senior Mortgage Consultant
Wintrust Mortgage
1333 N. Kingsbury, Ste, 201, Chicago, IL 60642

Office: 312-462-7715 | Cell: 773-848-4144 | eFax: 312-873-3818
chrisd@wintrustmortgage.com http://www.chrisdepaepe.com

If one of the units is sold to an owner-occupant/2nd home purchaser you will be back at 50% and again eligible for FHA financing. Until then Conventional is available as long as the purchaser is an owner-occupanct/2nd home purchaser. Once you have that one your condo is back on track.

Steve Stenger
President
Condo Approval Professionals LLC
(847)293-2962
E-mail:steve@condo-approval.com

Hi Apconstant,

Yes you can sell buy your pool of buyers will be smaller and very limited since your building will not qualify for an FHA mortgage.

If you're still planning to sell, talk to a sellers agent and make sure that agent has relationships with various lenders. Ask them to put together a "sellers packet/promo" for you. Something along the lines if the preferred lender is used they may offer closing cost credits, or, they can offer a lower down payment loan product on your building, something creative.

Interview a few sellers agent, start with the ones that answered your question right here on Trulia, myself included. Find one you mesh best with, one you feel has a good understanding of your scenario is willing to go the extra mile for you.

Good luck!

You will not be able to obtain FHA fianncing until you return to a 51% owner occupancy ratio -
However you can obtain coancentional financing with Fannie Mae and freddie Mac Products - but the buyers will need 20% down.

You will be able to sell, just not FHA.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
mlaricy@americorpre.com
708-250-2696

FHA loans won't work, but you can get creative to help buy down rate or prepay PMI for the buyer on a conventional loan. Talk to a lender, but i believe you can creatively position condo to a 10% down buyer and through buyer credit make it affordable for the buyer. Talk to a city agent that can help price it on the lower end of the price range aggressive side. Lower the price and buyer incentives & you will sell!

Why go to the trouble of becoming FHA approved if the Association/management of the building then allows the % of owner occupancy to fall below 50%???????
None of the big banks will lend in the building so you will need to find some smaller banks that 'portfolio' their loans. However, some buyers get turned off by buildings that have so low a % of owner occupied units. There are soooo many buildings in your situation that I believe in time more lenders will decide to offer products that work, but at the moment there are not many. My web site has some lender references that might be able to help.

I think a buyer will not be able to get a Fannie Mae or Freddie Mac backed loan. There are portfolio lenders the big banks use(Bank of America, Wells Fargo etc) who will provide a loan but maybe with a slightly higher interest rate or other more restrictive conditions such as amount of down payment. Around here, Prime Lending http://(www.primelending.com) is a good choice for condos that don't fall under traditional guidelines.

Hello Apconstant,
Yes, you will still be able to sell your home but buyers will no longer be able to obtain an FHA loan for financing. They will have to go with a conventional loan instead which may require more of a down payment (20%) to avoid PMI (mortgage interest) but even with an FHA loan the buyer would still have to pay the mortgage interest fees.
Hope this helps.
Good luck on selling!

Laura Feghali
Prudential Connecticut Realty