High Investor Condo Loans

Investor level: Investor level (the # of units owned by investors who rent them out) is important, and should be the very first question you ask when listing or showing a condo.

It used to be if a condo had a high investor level, you were going to have a hard time getting a mortgage, and maybe even not get one at all. The investor level of a condo is how many units of the total that investors own. For example, if a condo has 100 units, and 60 are owned by investors to be rented out and 40 units are owned as primary residences, then the condo has a 60% investor level.

Banks, PMI companies or Fannie Mae might require 60%, 65% or even 70% owner occupancy levels. It has been historically shown that condo buildings that are more heavily owner occupied have better performing loans with fewer delinquencies, and this is why Fannie Mae, Freddie Mac, banks and PMI companies analyze this data.

However, I have discovered a guideline change for Fannie Mae and Freddie Mac that says if a loan is for a primary residence, with 20% down, and if the condo building is established, that there is no analysis of the investor level at all. What defines a condo building as established is that the building is at least 90% sold and settled, no additional construction is planned, and that the homeowners association has been turned over from the developer to the unit owners.

If you have a 20% down deal, in an established condo, where the HOA has been turned over to the unit owners, they will not turn down a loan based solely on a high investor level.

This is big news for many condo buildings that have historically had higher investor levels and have thought they may be locked into being labeled as being a building that is hard or impossible to get financing in. These latest rules will help sellers sell, buyers buy, Realtors do their jobs, and condo buildings get some investor owned units back in the hands of owner occupants.