Selling Guide

Published April 07, 2021

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Are projects that contain multi-dwelling units eligible?

Projects that Contain Multi-Dwelling Unit Condos or Co-ops

Projects that contain multi-dwelling units are not permitted. These projects allow an owner to hold title (or share ownership and the accompanying occupancy rights) to a single legal unit that is sub-divided into multiple residential dwellings within the single legal unit, with ownership of the unit (or shares) evidenced by a single deed and financed by a single mortgage (or share loan). The sub-divided units are not separate legal units. This restriction applies regardless if the unit owner maintains one or more of the sub-divided units as rental units or uses one or more of the sub-divided units as accessory or lockout units.

This provision does not apply to condo or co-op projects that allow an individual to buy two or more individual legal units with the intent of structurally and legally combining the units for occupancy as a single-unit dwelling. Mortgages secured by units in these types of projects are eligible for purchase and securitization by Fannie Mae provided all of the following requirements are met:

• The unit securing the mortgage represents a single legal unit under a single deed.
• Any construction or renovation to structurally combine units has no material impact on the structural or mechanical integrity of the project’s buildings or the subject property unit.
• The individual units must be fully described in the legal description in the mortgage and under a single deed.
• The project’s legal documents must have been amended to reclassify the combined units as a single unit in the project.
• All structural renovation to physically combine the units must be completed.

A condo or co-op unit with an accessory unit may be eligible on a case-by-case basis with a Fannie Mae PERS Project Approval or a loan-level project eligibility waiver. See B4-2.2-07, Projects with Special Considerations and Project Eligibility Waivers, for additional information on submitting an exception request.

For additional information, see B4-2.1-03, Ineligible Projects.

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