AL and FL Mortgage News

Condos, Mortgages,and Eligibility Updates in 2016

March 8th, 2016 11:21 AM by Devin Murray

Search your local MLS, Zillow, Trulia, etc. and you will find that there are LOTS of condos on the market in both Alabama and Florida. If you are interested in capitalizing on this opportunity of purchasing a condominium, there are MANY questions to ask your realtor before considering a potential property and we always strongly encourage finding a realtor who specializes in condos first and foremost.  If you need financing for your condo, below is the current recent breakdown of conventional minimum down payment requirements for Eligible attached condos in Alabama and Florida based upon occupancy.  Please note all of this information is subject to change at any time. 

Maximum LTVs in Alabama 
Primary - 95%
Secondary - 95%
Investment - 80%

Maximum LTVs in Florida
Primary - 95%
Secondary - 90%
Investment - 80%

By far the biggest puzzle in obtaining financing for buyers and buyer's agents alike is finding a condo project that is actually Eligible for financing.  Below are a few links anyone can access with Fannie Mae (and also with HUD if you are willing to consider FHA financing).  While finding an Eligible condo does not automatically qualify you for the loan or a given down payment, this is a great start to searching for condos in your area if you are interested.

Fannie Mae PERS Look-Up - Updated Weekly

If you are not finding approved condos by searching your area, especially for those of you searching in Southeast Florida, this is not the end of the road for you.  This is true mainly because a condo can be Eligible even though it is not listed as already approved with Fannie (or HUD).  Even if you or your realtor go through the trouble to calling a long list of condo associations or association management companies in the area, paying fees for them to fill-out questionnaires @ $100+ each, most will have no idea if they ARE or ARE NOT eligible or even what that even means if you ask.  As a buyer, we do not recommend searching for eligible condos this way.

While explaining condo eligibility guidelines is complicated and not something we have room to attempt to explain here, if you are willing to put a little more money down Fannie Mae may allow a limited review approval for financing without requiring a full eligibility review.  The only way to know if you can get the loan with a limited review is to apply for the loan and have your loan officer get an automated approval through Fannie Mae's system.  

Limited Review Thresholds Alabama 
Primary - 90%
Secondary - 80%
Investment - not allowed

Limited Review Thresholds Florida
Primary - 75%
Secondary - 70%
Investment - not allowed

If you can get a limited review status on your automated approval, your lender will contact the association after you apply and send them a limited review questionnaire that is typically 10-15 questions long.  For you this typically means a much more streamlined eligibility process performed directly by the underwriter and more importantly the benefit of getting low conforming rates and APRs.  Again a limited review status doesn't guarantee eligibility or full loan approval.

In the case of a full review the list of requirements by your lender will grow to somewhere around 20-30 more detailed questions and additional documentation compared to those on the limited review.  Also the complexity of a full review typically warrants this detailed documentation being gathered by a third person, like a condo review desk, and not the underwriter assigned to your loan.  The end result is typically increased turn times on the review and a potential for decreased likelihood of eligibility.

Ultimately in the case of a both a limited review and full review here is a list of reasons, ranked by frequency that I have seen since 2004, that a condo project is usually be marked as NOT Eligible. This is in no way a complete list but gives you an idea of what will stop you from obtaining conforming financing on your condo even when your credit, income, and assets qualify.

Common Review Problems for Condos Project Financing

Excessive Investor Ownership: 50% of the total number of condo units can not be owned by investors.  Second home, vacation home, and owner occupants are not categorized as investors. 

Single Entity Ownership: No person or other entity, including the developer, can own more than 10% of the number of condo units

Developer Control: The project needs to have been turned over to the homeowners and 90% of the total units must be sold and closed.

"New" Attached Projects: Are not eligible for a limited review.  Restrictions apply with a full review.

Timeshares: Not allowed

Short-term Rentals: If the HOA advertises, participates and/or facilitates short term rentals the project is ineligible.  If the project operates like a resort/hotel/condotel/ with an on-site check-in rental desk, offers food, and/or cleaning services the project will likely be ineligible.

Commercial/Non-residential Units: These units cannot exceed 25% of the total number of units

Deliquent HOA dues: No more than 15% of the total number of units can be delinquent on their dues.  

ReSale/Title Restrictions: Legal documents in force within the project that restrict sales and transfer of clear title will typically require further review.

Litigation/Arbitration: The project needs to be cleared of any pending litigation.  

Common areas/Recreation Facilities: Unit owners, through the HOA, should have sole ownership interest/rights to use all facilities and common areas.  These facilities (new construction) must be completed at the time of application.

To find out if a condo you want to buy is eligible before you submit an offer or to get pre-approved to purchase or refinance a condo, please email



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