Selling Guide

Published April 07, 2021

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B5-5.2-02, Loans with Resale Restrictions: Loan and Borrower Eligibility (02/05/2020)

Introduction

This topic contains information on loans with resale restrictions: loan and borrower eligibility, including:


Loan Eligibility and Occupancy Types

The following table describes the eligible transaction types, products, occupancy types, and properties for loans with resale restrictions.

Eligibility Based on Type of Deed Restriction
Affordable Age-Related
Transaction Types Purchase and Refinance
Products Loans must be fixed-rate or adjustable-rate mortgages with an initial fixed period of five years or more, and can be any Fannie Mae product described in this Guide.
Borrowers Must meet applicable criteria of the deed restriction.

Note: Age-related deed restrictions generally apply to the unit occupant and frequently require only one occupant to be aged 55 and over. In such a case, the borrower could be younger than 55 provided there is a unit occupant aged 55 and over. This occupant can be a non-borrower household member or a renter in the case of investment property.

(It is permissible for both affordable and age-related requirements to apply to a single loan.)
Occupancy Types Principal residence only All occupancy types
Properties One- and two-unit properties, PUDs, condos, and co-ops

Three- and four-unit properties are not eligible.

Manufactured homes are not eligible unless they are located in a PERS-approved project.


Eligible Subsidy Providers for Affordability-Related Deed Restrictions

Eligible subsidy providers, or sponsors, of resale restrictions must be

  • nonprofit organizations;

  • churches;

  • employers;

  • universities;

  • municipalities (including state, county, or local housing agencies); or

  • entities that are otherwise administering government sponsored, federal, state, or local subsidy programs.

The subsidy provider must have established procedures for screening and processing applicants.


Eligible Borrowers for Affordability-Related Deed Restrictions

Eligible borrowers must satisfy the specific eligibility criteria and resale restrictions established by the subsidy provider. If the loan is a HomeReady mortgage, the more restrictive of the HomeReady income limit or the resale restriction income limit applies. See B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility for additional information.

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