Loans · Fannie Mae Selling GuideBuying a 55+ or deed-restricted home: how resale restrictions affect a Fannie Mae loan

Some homes come with recorded resale restrictions – a covenant, easement, condition or other instrument that limits who can buy or live there, for a set number of years or forever. Fannie Mae buys loans on properties with restrictions based on income limits, age, employment, occupancy, first-time homebuyer status, or homes principally serving residents with disabilities, and more than one can apply (Selling Guide B5-5.2). The restrictions may end automatically at foreclosure or a deed-in-lieu, or survive foreclosure – in that case the lender warrants they don't impair foreclosure. Their source and terms must be in the public land records so a routine title search finds them; they can't impair Fannie Mae's rights to cure a default or foreclose; and Fannie Mae must have first claim to insurance settlements and condemnation proceeds. The loan must be fixed-rate or an ARM with an initial fixed period of five years or more, on a one- or two-unit property (including PUDs, condos and co-ops). The borrower must meet the restriction's criteria; if both the restriction and the mortgage impose income limits, the stricter applies. Age restrictions usually apply to the occupant and often require only one occupant aged 55 or older, so a younger borrower can qualify when a household member – or, for an investment property, a renter – is 55+. The lender makes sure the borrower and appraiser know about the restrictions; if they survive foreclosure, the appraisal must reflect their effect on value using comparable sales with similar restrictions.