Fannie Mae Approved Condos

fannie mae approved condos

When buying a condo using a conventional loan your lender will need to submit the condo for review.

In this article we will explain what Fannie Mae approved condos are and the mortgage programs available. You will also find out the Fannie Mae qualifications and guidelines on condos and townhouses.

Apply for FHA loans here

What are Fannie Mae approved condos?

Fannie Mae and Freddie Mac are Government Sponsored companies that purchase mortgage loans from lenders. If you have a conventional mortgage loan, chances are that is it owned by Freddie Mac or Fannie Mae. For a condo to be purchased using a conventional mortgage, the lender will need to submit the condo project for review.

Fannie Mae ineligible Condos

  • Hotel and motel projects
  • Investment Projects with documents on file with SEC
  • Mandatory Fee’s for access to amenities
  • HOA has been, or is in litigation
  • Manufactured housing

See all Fannie Mae Approved Condo requirements on the Fannie Mae website.

Condo Ownership Guidelines:

  • 21+ units – No more than 10% can be owned by one person or company
  • 5 – 20 units – two units
  • 2 to 4 units – one unit

Getting a mortgage on a condo

Most any lender can help you get approved for a condo with a conventional loan. Typically lender swill require a credit score of at least 620-640 to qualify. Down payments can range between 5% – 20% depending on the circumstances and lender. Besides the fact that a condo must be submitted to Fannie Mae for approval, the process of buying a condo is very similar to buying a single family home.

Borrower requirements:

  • Employed by same company, or in the same line of work for past 2 years
  • 2-3 months reserves available
  • 620-640 minimum credit score
  • Provide W2’s, pay stubs, tax returns
  • Front-end DTI (debt to income) ratio of less than 32% .
  • 41%  maximum back-end DTI.

How to buy a Fannie Mae Approved Condo with just a 3% down Payment

Most conventional loans will require between 5% – 20% down. However, there is a program you may have never heard of called the Conventional 97. This mortgage offers 97% LTV financing, meaning you just need a 3% down payment. The Conventional 97 loan also allows down payments to be a gift from a relative or friend. The loan limit for the conventional 97 is $424,100.


Conventional 97 Mortgage Requirements

  • Fixed rate loan
  • Single family, PUD, co-op, and Fannie Mae approved condos
  • First time home buyer (Defined as having not owned a home in last 3 years)
  • Open to owner-occupants only
  • 620 minimum credit score requirement

Project Eligibility Review Service (PERS)

Lenders can contact conduct PERS to submit projects to be reviewed by Fannie Mae for approval. There are two types of condo reviews, automated and manual condo project manager (CPM) reviews.

Eligible Fannie Mae condo projects:

  • Detached unit in an already established condominium project
  • Attached unit in an already established condominium project

Buying a condo with poor credit, or a low down payment

If you don’t have at least a 620 credit score, or have the down payment that is needed for Fannie Mae condos. You can look into FHA approved condos, which can be purchased with an FHA mortgage. FHA loans are backed by the Government, which allows lender to loosen their buyer requirements. You may qualify for FHA with a credit score of just 580, with a 3.5% down payment. You can search the FHA approved condo list here.

Condos for Veterans

If you’re a Veteran, you can buy a condo using a VA loan. Just like any other mortgage it must be a condo approved by the VA. VA loans are the cheapest type of mortgage program around. This is because they do not have mortgage insurance (MIP) and are 100% financed. You will not need a down payment with a VA mortgage. You can read more about using a VA loan to purchase VA approved condos here.