Fannie Mae Finance Changes for 2018 - What You Should Know


As of June 5th, 2018, Fannie Mae has updated it's eligibility requirements for mortgage lending on condo units, co-ops, and planned unit development (PUD) projects . These changes have the greatest effect on the following entities:

  1. Single-Entity Ownership
  2. Commercial Space Within Building
  3. Investment Property Transactions
  4. Two-to-Four Unit Condos
  5. Legal Non-Conforming Zoning
  6. Refinances

For your convenience we have listed the most notable changes real estate buyers, sellers and investors should look out for when financing property 2018 and beyond.

Single-Entity Ownership

  • The single-entity ownership requirement is waived when the purchase transaction will result in a reduction in the single-entity ownership concentration (maximum single entity ownership 49%, no delinquent dues, no pending or active special assessments)
  • Units held by non-profits, affordable housing programs (including units subject to non-eviction rent regulation codes), or institutions of higher education from the percentage of single entity ownership calculation are exempt
  • Single-entity ownership projects will increase to 20% if the building project has 21 or more units

Commercial Space

  • Commercially owned or operated parking spaces from the project’s commercial space calculations are now exempt
  • Increase commercial space limit to 35%

Investment Property Transactions

  • Allow investor transactions to be eligible for Limited Review for LTV, CLTV, and HCLTV to 75%
  • The “Limited-Review” process waives the need for a lender to review all condo declarations, rules and regulations, bylaws and budget that would take place during the mandatory Full Review process. By making this change, lenders are able to expedite the loan approval process.

Two-to Four-Unit Condo Projects

A Two-to Four-Unit Condo Projects is a project made up of two (2) to four (4) residential units in which each unit is claimed by its own title and deed. This type of project may be either a new or on going project made up of attached and/or detached units.

  • Project review requirements are waived with the exception of some basic requirements that apply

Basic verification include:

  1. Property cannot be a condotel, timeshare or houseboat
  2. If an appraisal is required, it must meet minimum lending standards.
  3. Property must meet minimum safety and structural requirements
  4. Insurance for building must meet minimum applicable requirements
  5. Must determine if building resides in flood plain and ample acceptable insurance is secured by HOA

Legal Non-Conforming Zoning

  • Align project standards policy to standard appraisal policy that requires the appraiser to comment on the market response to legal non-conforming zoning. Appraisers now can be the only needed individual to assess and determine legal non conforming replacement situations for lender approval


Fannie Mae are allowing refinancing with waivers on condominiums that qualify as certain project types, and certain loan transactions, including:

  • Detached condo units;
  • Units in a two- to -four unit condo project;
  • Units in a PUD project;
  • Fannie Mae to Fannie Mae limited cash-out refinances with LTV ratios < 80%;
  • DU Refi Plus and Refi Plus loans secured by a property in a condo, co-op, or PUD project.

More information on these qualification and other can be found on Fannie Mae site here

Addition information abut these changes and other updates to lending practices can be found here