There are a LOT of misconceptions about condo financing at the moment, and that's because there are a LOT of new rules and regulations, BUT if you're in a 12-unit, established condominium, the bottom line is ... you're okay.
It is true that IF your building is or will be FHA approved, that FHA only requires 51% owner occupancy. However, you would need the rest of your building to go along with FHA financing, and many condo boards do not want to. Still, your situation is far from dire.
The 70% that you've been seeing is NOT a requirement for conforming financing. It is a requirement for conforming Mortgage Insurance, so if your buyer has 20% down, this is not an issue.
Fannie Mae and Freddie Mac HAVE NO SET LIMIT on owner-occupancy limits if the next purchaser wants to buy your condo as their primary residence. (although if it falls below 50%, we'll probably need compensating factors to overcome this.) A lot of individual investors (GMAC, Wells, US Bank, etc.) may have their own overlays, but as a direct seller to Fannie Mae and Freddie Mac, Wintrust Mortgage can frequently do things that mortgage brokers and other bankers cannot do.
The 51% limit on Fannie and Freddie loans applies to buyers who want to purchase your condo as an investment property. But since you're at 66.67%, you're still okay.
So, to recap, if you can't go FHA, then you need to let your realtor know to only accept conforming bids with 20% down. This will LIMIT the pool of borrowers available, but it will not prevent you from selling.
general conventional lending guidlines will require that you have an owner occupancy ration of 70%. FHA will require 51% owner Occupancy which does allow for more flexibility. With that being said there are some excpetions on a case to case basis with conventional financing - but this would require that the buyer intends on occupying the porperty as their primary residence and has a minimal down payment of 20%.
At 66.67% you do have a chance of getting this exception but I would recommend having the building FHA approved so that you can access the buyers who may not have a larger down payment.
I would be happy to assist with an FHA approval - It would only take a few minutes to tell you if the building will qualify and if this is an option then we can process this in as little as 2 weeks
Please feel free to contact me directly with any questions
If for some odd reason you do not get any lender responses here my web site has a few references to check with.
• 100 % VA Condo Mortgage Loans Down to a 550 fico!
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There have been many Chicago debates about this issue, including a few high profile lawsuits in some of the larger Chicago buildings. As you're probably aware, some buildings have implemented hard caps, others have implemented grandfathered in leasing clauses for current owners and others have let rental ratios climb to levels where financing has been almost impossible.
I work very closely with the president of a great mortgage bank who can provide quick FHA approvals. They also provide helpful marketing materials on the FHA options for buyers when they arrive. I would be happy to put you in touch. From my experience, the FHA approval option should absolutely be your first step to preserve your ability to have financed buyers.
Good luck and please reach out if I can help,
FHA approval is key so that your condominium is open to all potential purchasers. My company, Condo Approval Professionals LLC, can prequalify you for free and help obtain FHA approval quickly. We have over 16 years of national condo project approval experience.
Feel free to contact me with any questions.
Condo Approval Professionals LLC