I’m a mortgage processor at a local bank. I’m not an underwriter, but I’m very familiar with residential underwriting requirements in our market (including a not-insignificant number of condos).
We use a standard condo questionnaire that the HOA is required to complete before we will approve a loan at any project. In addition to the condo questionnaire, we also need to review the bylaws, budget, and master policy (liability insurance covering the project as a whole). I believe most HOAs charge the borrower a fee to fill out the questionnaire, but that is not a part of our transaction. We’re a Freddie shop, but the questionnaire we use was developed by Fannie. I believe this is a standard form across the industry, but I can only speak for my employer’s practices.
You may find this Freddie Mac condo guide helpful. The “ineligible projects” section on page 2 is good reading. It’s geared toward underwriters, but you don’t need a financial background to understand the basics. The percentage of owner-occupied units is one of the (many) questions asked to determine sufficiency of the collateral. But this is really only a factor if the condo is purchased as an investment property (see: bottom of page 3). In that case, a minimum of 50% of units in the project must be owner-occupied. But if it’s being purchased as your primary or second/vacation home, we don’t care.
I’ve experienced a few issues that will kill a deal outright, such as pending litigation, or a significant proportion of units that are delinquent on HOA dues. Freddie guidelines do not permit us to lend in projects where >15% of units are >60 days delinquent. Apropos of nothing, just some interesting tidbits