High Investor Condo Loans

Investor level

Investor level is the # of units owned by investors who rent them out. It 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.

Example

The investor level of a condo is how many units of the total that investors own. For example, let’s assume a condo has 100 units, and 60 are owned by investors to be rented out and 40 units are owned as primary residences. The condo has a 60% investor level.

Guidelines

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. 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. It 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 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.

However, if a buyer is buying a condo as an investor to rent out, investor level with be scrutinized.

Conclusion

This is big news for many condo buildings that have historically had higher investor levels. They previously 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, and Realtors do their jobs. And, condo buildings can get some investor owned units back in the hands of owner occupants.