No Central HVAC - Fannie Mae Policy

[Tumbuktu]

Does Fannie Mae have any special guidelines for a property with no central HVAC system, where Cooling Source is 'Window A/C' and Heating Source is 'Space Heaters'?

As always feedback and guidance would be appreciated.

 

[Tawfik Ahdab]

Neither of those are considered permanent heat sources, as they do not pass the fixture test.

 

[J Grant]

Does Fannie Mae have any special guidelines for a property with no central HVAC system, where Cooling Source is 'Window A/C' and Heating Source is 'Space Heaters'?

As always feedback and guidance would be appreciated.

I believe that certain warm-weather counties in states such as FL and a few others are exempt from having a central heat source. Not sure if AC is required in these states - I believe not but would have to check - their policies are so hard to find , buried in their enormous tomes or in some update that is hard to track down. But try putting it in an online search engine; sometimes the result pops up.

I do not believe a space heater is acceptable - that is a personal property small appliance. Perahps an installed window unit or small wall unit or baseboard unit as heat source is acceptable.

 

[Tumbuktu]

So Fannie Mae won't purchase the mortgage of such a property from the lender?

 

[J Grant]

So Fannie Mae won't purchase the mortgage of such a property from the lender?

IDK- the property might need to be made subject to install heat source in an appraisal. Maybe they won't purchase the property as is - which is not our problem - we just report what exists.

 

[alebrewer]

As far as I'm aware, the GSE's have no 'permanent heat source' requirement. I think you're thinking of FHA. This is all that I'm aware of from the Fannie guide:

Conformity of Improvements to Neighborhood​

The improvements should conform to the neighborhood in terms of age, type, design, and materials used for their construction. If there is market resistance to a property because its improvements are not compatible with the neighborhood or with the requirements of the competitive market because of adequacy of plumbing, heating, or electrical services; design; quality; size; condition; or any other reason directly related to market demand, the appraiser must address the impact to the value and marketability of the subject property. However, the lender should be aware that many older neighborhoods have favorable heterogeneity in architectural styles, land use, and age of housing.

 

[J Grant]

AI Overview
Learn more

Fannie Mae requires properties to have a reliable and permanent heat source for year-round occupancy, meaning it must be self-fueled and permanently installed. This generally includes forced air systems, radiant heat, baseboard heaters, or wall units, but not space heaters, fireplaces, or wood stoves unless they meet specific criteria (e.g., reservoir capacity).

Here's a more detailed breakdown:

What's acceptable?

• Forced air heating systems: These are the most common and generally qualify.
  
  
• Wall furnaces: Common in older homes, they also qualify.
  
  
• Split system heat pumps: These newer systems with exterior compressor/condenser and interior air handlers also meet requirements.
  
  
• Pellet stoves: If the reservoir can last 1-2 days before refilling, they're acceptable.
  
  
• Radiant floor heating systems: These systems with hot water flowing through the floors are acceptable.
  
  
• Baseboard heaters: Electric baseboard units are acceptable.
  
  
• Installed wall units: These also qualify as permanent heat sources.
  

What's NOT acceptable as a primary heat source?

• Space heaters: Portable, non-installed heaters are not considered permanent.
  
  
• Fireplaces: Unless they are a primary source of heat and meet certain criteria (e.g., fuel capacity for pellet stoves), they are not sufficient on their own.
  
  
• Wood stoves: Similar to fireplaces, they require a reliable backup heat source to meet the "year-round occupancy" requirement.
  

( I found the above on AI, I can not confirm whether accurate or not -)

 

[J Grant]

Property Data Collection User Guide - April 2024​

Fannie Mae
https://singlefamily.fanniemae.com › display


PDF

Apr 1, 2024 — If there are multiple heat sources, choose all that apply. If there is no heat source, “No Heat” must be selected. A photo of the heating ...

Heating and Cooling requirements​

 

[Terrel L. Shields]

So Fannie Mae won't purchase the mortgage of such a property from the lender?

Ridiculous. They always accepted a space heat source so long as it was thermostatically controlled and AC is not even required. Think the Rockies. Who needs an AC at 9,000 feet elevation? Virtually none of the older homes in the Rockies higher elevations need an AC. 30 years ago it was not uncommon here to have new houses built with no AC and no central heat.

FNMA no longer even mentions air or heat. FHA, OTOH does not even require AC but if it is in place must be working.

 

[J Grant]

I also found the above post 8- was AI wrong? Wow AI can be wrong. Who knew.

I was thinking FHA when I first responded - it would seem a property in a cold climate without a heat source would be C 5? Since most properties have a heat source as essential, who the heck knows? All the guidelines should be clearly printed for appraiser use only and made available in one fast lookup source. The guidelines are often mixed in with lender requirements vs appraiser requirements.