Clearwater Condos have new hurdle in getting a Mortgage now – Bargain Hunters Beware

Clearwater Florida – It’s the time of year when we get lots of calls from people from NY, PA, OH, MI, Canada and more come down to looking to buy a Clearwater condo and those closer to Clearwater Beach Florida the better. Well now buying one of these condos just got a lot harder and darn near impossible if you’re not paying cash. Fannie Mae has slapped Florida with  new tough guidelines – to learn more check out this recap from the The Miami Herald on the the new Florida Fannie Mae Guidelines for Clearwater FL condominiums.

“The standards, which took effect last week and apply only to Florida, include requiring that no more than 15 percent of a building’s unit owners be delinquent on association fees as a condition of funding home loans to new buyers.

Fannie Mae buys the majority of Clearwater Florida home loans from lenders, so it wields significant power in the making of mortgages. Fannie-backed loans generally offer the best rates and lowest down payments for borrowers.”

New Fannie Mae Clearwater FL Condo Mortgage Guidelines

“Fannie Mae has issued new guidelines that Florida condos and condo conversions, and, in some cases, old condos, must meet before it will fund loans:

  • At least 70 percent of the units in new condos must be presold.
  • No more than 10 percent of units can be owned by a single entity.
  • No more than 15 percent of units in all condos can be more than 30 days past due on association fees.
  • No more than 20 percent of a condo can be devoted to commercial use.
  • All condos, new and old, must have fidelity insurance, which protects association funds from fraud.
  • The seller is not allowed to help with down payments or offer other perks, like deductions of association fees, unless they are disclosed.
  • Condos must have hazard insurance.
  • When investors buy in established projects, at least 51 percent of units must be owner-occupied.”

Source: Miami Herald

The dilemma may not be obvious to you if you’re just starting to “look for Clearwater condos that are bargains” which is what people ask us everyday.  Let me give you an example of how these changes may effect you now. There are some Clearwater properties that were built in the height of the real estate boom – it was not uncommon back then for someone to pay homeless people to wait in line so they could get a spot in the new construction because many believed there was no way not to make money and for a long time that seemed to be true.

Now fast forward to 2009 – many of those speculative investors who bought and never intended to hold the condominiums are now ending in short sales and foreclosures others have lost money in the stock market and their situation has changed and their vacation property may no longer be affordable for them. With large monthly condo association fees they quit paying the association which presents additional problems and already burdens to the other condo owners. (This is why as your buyers agent we recommend closely scrutinizing an association’s financials)  Well now… if more than 15 percent of units in all condos are more than 30 days past due on association fees…then no buyers can get a Fannie Mae mortgage for those condos – WHOA! That’s HUGE!!!

So the end result is with the most distressed properties and bargains may have become “cash only deals” almost overnight.  The communities most in need of buyers may actually be the most hrt by these new rules. If you are planning on buying Clearwater condos you should definitely have real estate agents, like us, to make sure you’re getting the latest information you need to make informed decisions in this dynamic Clearwater real estate market.

If you’re looking to understand all your Florida mortgage options for condominiums, please call Kevin Sandridge at 863-604-3019, or contact him via email at

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