AL and FL Mortgage News

2019 Condo Lending Improvements Attention All Buyers, Sellers, and Realtors

March 28th, 2019 9:02 AM by Devin Murray


If you are in the market to buy or sell a condo and need financing, there is good news in 2019 that is getting very little marketplace attention.  As we mentioned in a few previous posts, strict lending requirements imposed for a decade have made more than 90% of an estimated 8 million condo units nationwide ineligible for conventional and FHA financing.  In the face of increasing popularity of condos as a great housing solution, Fannie Mae has been the first to see the devastation, smell the roses, and take action and it appears HUD is following suit.


In the last three years the most successful way to finance a condo anywhere in the country was to find a unit that was in an eligible project (less than 1 in 10 chance) or put anywhere from 10% to 30% down and hope that whatever made that condo project ineligible would be avoided in a limited review.  This situation and the host of problems it created have forced the masses to seek portfolio or private financing with 20-30% down payment requirements thereby barring most from ever owning a condo.

As we have mentioned before regardless of limited review or full review status, Fannie Mae knows the number one killer of conventional condo financing is high investor concentration, high single entity ownership, and an associations involvement in litigation.  Realizing how damaging this has been to existing owners and potential buyers here is summary of what has changed:

Conventional – more updates coming in June 2019

  1. Investment Concentration – probably the single biggest condo deal killer since 2009
    • Primary and Second Homes – previously set a 50% of the total number of units in the project, now 99% investment ownership is allowed.
    • Investment Property – 99% investment allowed as long as buyer puts 25% down in AL, 30% down in Florida otherwise it still needs to be below 50%


  2. Single Entity Ownership – likely the second biggest condo deal killer
    • Previously marked at 10% now expanded to 25%. Fannie Mae allows exceptions as high as 49% if the builder/developer is that single entity and shows a sales and marketing plan to sell those units. Units owned by the developer that are on the market and vacant are not counted/tallied.


  3. Limited Reviews vs Full Reviews
    • Recap on Primary and Secondary: Limited reviews in Alabama are still 90% LTV for owner occupied and 80%LTV for second homes. This drops to 75%LTV and 70%LTV respectively in Florida. No change here. The importance of this in light of the changes above can not be over-stated and is probably where the biggest impact will occur.
    • Investment Property Limited Reviews – are now allowed with 30% down. Previously if you were an investor, an automatic full review was required. Most investors were forced to portfolio or private money solutions.


  4. Pending Litigation
    • Does not now automatically kill the deal. Single unit damage litigations ok, non-monetary, HOA is seeking is the plaintiff seeking funds, slip and falls ok

Conventional LTV Updates

  • Max LTV for primary increases from 95% to 97%*
  • Max LTV for second homes remains at 90%*
  • Max LTV for investment increases from 80% to 85%*
  • *Please note these max LTVs will require a full project review versus a limited

FHA Condos

Like Fannie Mae It is noteworthy to echo that “Spot approvals” from HUD are now re-branded as “Single Unit Approvals” are rumored to be released in May 2019.  Not seen since 2010 these allow a lender to approve loans on units that don’t have project approval subject to minor limitations.  Once this change is released this will open up FHA financing for condos in all markets across the country. 

At the time of this post there are 124 Approved in FL and 21 in AL but FHA condos projects but the update here is not non-Florida condos can be approved in as little as 48 hours.  Existing HUD approved condos can still be found here

VA Condos
In closing it is important to mention that VA condos never expire.  In Florida there are 1612 with “Accepted” status and in Alabama there are 166.  If you want to know if certain projects in your area are approved, please email us and we can generate and send you a printout.

If you would like to learn more about condo financing in Florida or Alabama, you can apply online 24 hours a day or contact a licensed originator by phone during normal business hours at 888-269-8335.

This information is subject to change at any time.  The information herein does not constitute a commitment to lend.

Photo Credit: Jeremy Kierez @jeremykierez




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