source:
  type: guide
  id: fnma-sel-b2-3-04
  authority: Fannie Mae Selling Guide B2-3-04 — Special Property Eligibility Considerations
  description: Fannie Mae Selling Guide B2-3-04 — Special Property Eligibility Considerations.
  coverage_tier: operative
obligations:
- id: fnma-sel-b2-3-04-full
  canonical_id: fnma-sel-b2-3-04-full
  section: Fannie Mae Selling Guide B2-3-04 — Special Property Eligibility Considerations
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B2-3-04 — Special Property Eligibility Considerations
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B2-3-04, Special Property Eligibility Considerations (10/08/2025)
      Introduction This topic contains information on Fannie Mae’s unique property
      eligibility requirements, including: Accessory Dwelling Units Multiple Parcels
      Mixed-Use Properties Hawaiian Lava Zones Properties with Solar Panels Uniform
      Appraisal Dataset (UAD) 3.6 Policy Accessory Dwelling Units An ADU is typically
      an additional living area independent of the primary dwelling that may have
      been added to, created within, or detached from a primary one-unit dwelling.
      The ADU must provide for living, sleeping, cooking, and bathroom facilities
      and be on the same parcel as the primary one-unit dwelling. The following table
      describes the requirements for classifying an ADU. ✓ Requirements • Only one
      ADU is permitted on the parcel of the primary one-unit dwelling. • ADUs are
      not permitted with a two- to four-unit dwelling. Published May 6, 2026 257 ✓
      Requirements • The ADU must ⚬ be subordinate in size to the primary dwelling.
      ⚬ have the following separate features from the primary dwelling: ▪ means of
      ingress/egress, ▪ kitchen, ▪ sleeping area, ▪ bathing area, and ▪ bathroom facilities.
      • The ADU may, but is not required to, include access to the primary dwelling.
      However, it is not considered an ADU if it can only be accessed through the
      primary dwelling or the area is open to the primary dwelling with no expectation
      of privacy. • The kitchen must, at a minimum, contain the following: ⚬ cabinets;
      ⚬ a countertop; ⚬ a sink with running water; and ⚬ a stove or stove hookup (hotplates,
      microwaves, or toaster ovens are not acceptable stove substitutes). • An independent
      second kitchen by itself does not constitute an ADU. • The removal of a stove
      does not change the ADU classiﬁcation. See B3-3.8-01, Rental Income for the
      requirements that need to be satisﬁed in order to include rental income in qualifying.
      Construction of an ADU The construction method of an ADU can be site- or factory-built,
      including modular, and single- or multi-width HUD Code manufactured homes that
      are legally classiﬁed as real property. If an ADU is present, the primary dwelling
      must be site-built or a modular home. If the ADU is a HUD Code manufactured
      home, the lender must verify the following: the property was built in compliance
      with the Federal Manufactured Home Construction and Safety Standards (established
      June 15, 1976, as amended and in force at the time the home was manufactured),
      it is attached to a permanent foundation system in accordance with the manufacturer’s
      requirements for anchoring, support, stability, and maintenance, the foundation
      system must be appropriate for the soil conditions for the site and meet local
      and state codes, it is encumbered by the mortgage with the primary dwelling,
      and additional requirements that appear in HUD regulations in 24 C.F.R. Part
      3280. Compliance with these standards must be evidenced by photos of the HUD
      Data Plate or HUD Certiﬁcation Label(s) (for each section of the home) in the
      appraisal. If the original or alternative documentation cannot be Published
      May 6, 2026 258 obtained for the HUD Data Plate or the HUD Certiﬁcation Label(s),
      the loan is not eligible for sale to Fannie Mae. See B2-3-02, Special Property
      Eligibility and Underwriting Considerations: Factory-Built Housing, for more
      information. Examples of ADUs Examples of ADUs include, (but are not limited
      to): a living area over a garage, a living area in a basement, a small addition
      to the primary dwelling, or a manufactured home (legally classiﬁed as real property).
      Whether a property is deﬁned as a one-unit property with an ADU or a two- to
      four-unit property will be based on the characteristics of the property, which
      may include, but are not limited to, the existence of separate utility meter(s),
      a unique postal address, and whether the unit can be legally rented. The appraiser
      must determine compliance with this deﬁnition as part of the analysis in the
      Highest and Best Use section of the appraisal. See B4-1.3-05, Improvements Section
      of the Appraisal Report for additional ADU appraisal requirements. Zoning for
      an ADU Some ADUs may predate the adoption of the local zoning ordinance and
      therefore be classiﬁed as legal nonconforming. An ADU should always be considered
      legal if it is allowed under the current zoning code for the subject property.
      If it is determined that the property contains an ADU that is not allowed under
      zoning (where an ADU is not allowed under any circumstance), the property is
      eligible under the following additional conditions: The lender conﬁrms that
      the existence will not jeopardize any future property insurance claim that might
      need to be ﬁled for the property. The appraisal requirements related to zoning
      for an ADU are met. See B4-1.3-05, Improvements Section of the Appraisal Report
      Multiple Parcels The table below provides the requirements when the security
      property consists of more than one parcel of real estate. ✓ Multiple Parcels
      Requirements Each parcel must be conveyed in its entirety. Parcels must be adjoined
      to the other, unless they comply with the following exception. Parcels that
      otherwise would be adjoined, but are divided by a road, are acceptable if the
      parcel without a residence is a non-buildable lot (for example, waterfront properties
      where the parcel without the residence provides access to the water). Evidence
      that the lot is non- buildable must be included in the loan ﬁle. Published May
      6, 2026 259 ✓ Multiple Parcels Requirements Each parcel must have the same basic
      zoning (for example, residential, agricultural). The entire property may contain
      only one dwelling unit. Limited additional non-residential improvements, such
      as a garage, are acceptable. For example, the adjoining parcel may not have
      an additional dwelling unit. An improvement that has been built across lot lines
      is acceptable. For example, a home built across both parcels where the lot line
      runs under the home is acceptable. The mortgage must be a valid ﬁrst lien that
      covers each parcel. Mixed-Use Properties Fannie Mae purchases or securitizes
      mortgages that are secured by properties that have a business use in addition
      to their residential use, such as a property with space set aside for a day
      care facility, a beauty or barber shop, or a doctor’s oﬃce. The following special
      eligibility criteria must be met: The property must be a one-unit dwelling that
      the borrower occupies as a principal residence. The borrower must be both the
      owner and the operator of the business. The property must be primarily residential
      in nature. The dwelling may not be modiﬁed in a manner that has an adverse impact
      on its marketability as a residential property. See B4-1.4-07, Mixed-Use Property
      Appraisal Requirements, for appraisal considerations. Hawaiian Lava Zones Fannie
      Mae will only purchase or securitize mortgage loans secured by properties that
      are located within lava zones 3 through 9 on the island of Hawaii. Properties
      in lava zones 1 and 2 are not eligible due to the increased risk of property
      destruction from lava ﬂows within these areas. Hawaiian lava ﬂow maps and other
      information are available online at the U.S. Geological Survey Hawaiian Volcano
      Observatory website. Properties with Solar Panels The ownership and debt ﬁnancing
      structures commonly found with solar panels are key to determining whether the
      panels are third-party owned, personal property of the homeowner, or a ﬁxture
      to the real estate. Common ownership or ﬁnancing structures include: borrower-owned
      panels, Published May 6, 2026 260 leasing agreements, separately ﬁnanced solar
      panels (where the panels serve as collateral for debt distinct from any existing
      mortgage); or power purchase agreements. Fannie Mae will purchase or securitize
      a mortgage loan on a property with solar panels. If the borrower is, or will
      be, the owner of the solar panels (meaning the panels were a cash purchase,
      were included in the home purchase price, were otherwise ﬁnanced and repaid
      in full, or are secured by the existing ﬁrst mortgage), our standard requirements
      apply (for example, appraisal, insurance, and title). Properties with solar
      panels and other energy eﬃcient items ﬁnanced with a PACE loan are not eligible
      for delivery to Fannie Mae if the PACE loan is not paid in full prior to or
      at closing. For additional information, see B5-3.4-01, Property Assessed Clean
      Energy Loans. Lenders are responsible for determining the ownership and any
      ﬁnancing structure of the subject property’s solar panels in order to properly
      underwrite the loan and maintain ﬁrst lien position of the mortgage. When ﬁnancing
      is involved, lenders may be able to make this determination by evaluating the
      borrower’s credit report for solar-related debt and by asking the borrower for
      a copy of all related documentation for the loan. The lender must also review
      the title report to determine if the related debt is reﬂected in the land records
      associated with the subject property. If insuﬃcient documentation is available
      and the ownership status of the panels is unclear, no value for the panels may
      be attributed to the property value on the appraisal unless the lender obtains
      a Uniform Commercial Code (UCC) “personal property” search that conﬁrms the
      solar panels are not claimed as collateral by any non-mortgage lender. Note:
      A UCC ﬁnancing statement that covers personal property and is not intended as
      a “ﬁxture ﬁling” must be ﬁled in the oﬃce identiﬁed in the relevant state’s
      adopted version of the UCC. Lenders are responsible for ensuring the appraiser
      has accurate information about the ownership structure of the solar panels and
      that the appraisal appropriately addresses any impact to the property’s value.
      Separately ﬁnanced solar panels must not contribute to the value of the property
      unless the related documents indicate the panels cannot be repossessed in the
      event of default on the associated ﬁnancing. Any contributory value for owned
      or ﬁnanced solar panels must comply with Energy Eﬃciency Improvements in B4-1.3-05,
      Improvements Section of the Appraisal Report . The following table summarizes
      some of the speciﬁc underwriting criteria that must be applied depending on
      the details of any non-mortgage ﬁnancing for the solar panels. Published May
      6, 2026 261 If the solar panels are... Then the lender must... Financed and
      collateralized -- the solar panels are collateral for the separate debt used
      to purchase the panels, but they are a ﬁxture to the real estate because a UCC
      ﬁxture ﬁling* has been ﬁled for the panels in the real estate records • Obtain
      and review the credit report, title report, appraisal, and/or UCC ﬁxture ﬁling*,
      related promissory note and related security agreement that reﬂect the terms
      of the secured loan; • Include the debt obligation in the DTI ratio calculation;
      • Provided that the panels cannot be repossessed for default on the ﬁnancing
      terms, instruct the appraiser to consider the solar panels in the value of the
      property (based on standard appraisal requirements); and • Include the solar
      panels in other debt secured by the real estate in the CLTV ratio calculation
      because a UCC ﬁxture ﬁling* is of record in the land records. Note: If a UCC
      ﬁxture ﬁling* is in the land records as a priority senior to the mortgage loan,
      it must be subordinated. Financed and collateralized -- the solar panels are
      reported to be collateral for separate (non- mortgage) debt used to purchase
      the panels, but do not appear on the title report • Obtain and review documentation
      suﬃcient to conﬁrm the terms of the secured loan (such as copies of the credit
      report, title report, any UCC ﬁnancing statement, related promissory note or
      related security agreement); • Include the debt obligation in the DTI ratio
      calculation; • Instruct the appraiser not to provide contributory value of the
      solar panels towards the appraised value because the panels are collateral for
      another debt; • Not include the panels in the LTV ratio calculation; and • Not
      include the debt in the other debt secured by the real estate in the CLTV ratio
      calculation since the security agreement or any UCC ﬁnancing statement treat
      the panels as personal property not aﬃxed to the home. *A ﬁxture ﬁling is a
      UCC-1 ﬁnancing statement authorized and made in accordance with the UCC adopted
      in the state in which the related real property is located. It covers property
      that is, or will be, aﬃxed to improvements Published May 6, 2026 262 to such
      real property. It contains both a description of the collateral that is, or
      is to be, aﬃxed to that such property, and a description of such real property.
      It is ﬁled in the same oﬃce that mortgages are recorded under the law of the
      state in which the real property is located. Filing in the land records provides
      notice to third parties, including title insurance companies, of the existence
      and perfection of a security interest in the ﬁxture. If properly ﬁled, the security
      interest in the described ﬁxture has priority over the lien of a subsequently
      recorded mortgage. If the solar panels are leased from or owned by a third party
      under a power purchase agreement or other similar lease arrangement, the following
      requirements apply (whether to the original agreement or as subsequently amended).
      ✓ Lender Requirements for Properties with Solar Panels that are Leased or Covered
      by a Power Purchase Agreement The lender must obtain and review copies of the
      lease or power purchase agreement. The monthly lease payment must be included
      in the DTI ratio calculation unless the lease is structured to • provide delivery
      of a speciﬁc amount of energy at a ﬁxed payment during a given period, and •
      have a production guarantee that compensates the borrower on a prorated basis
      in the event the solar panels fail to meet the energy output required for in
      the lease for that period. Payments under power purchase agreements where the
      payment is calculated solely based on the energy produced may be excluded from
      the DTI ratio. The value of the solar panels cannot be included in the appraised
      value of the property. The value of the solar panels must not be included in
      the LTV ratio calculation, even if a precautionary UCC ﬁling is recorded because
      the documented lease or power purchase agreement status takes priority. Note:
      A “precautionary” UCC ﬁling is one that lessors often ﬁle to put third parties
      on notice of their claimed ownership interest in the property described in it.
      When the only property described in the UCC ﬁling as collateral is the solar
      equipment covered by the lease or power purchase agreement, and not the home
      or underlying land, such a precautionary UCC ﬁling is acceptable (and a minor
      impediment to title), as long as the loan is underwritten in accordance with
      this topic. The value of the solar panels must not be included in other debt
      secured by real estate in the CLTV ratio calculation because the documented
      lease or power purchase agreement status takes priority. Published May 6, 2026
      263 ✓ Lender Requirements for Properties with Solar Panels that are Leased or
      Covered by a Power Purchase Agreement The property must maintain access to an
      alternate source of electric power that meets community standards. The lease
      or power purchase agreement must indicate that • any damage that occurs as a
      result of installation, malfunction, manufacturing defect, or the removal of
      the solar panels is the responsibility of the owner of the equipment and the
      owner must be obligated to repair the damage and return the improvements to
      their original or prior condition (for example, sound and watertight conditions
      that are architecturally consistent with the home); • the owner of the solar
      panels agrees not to be named loss payee (or named insured) on the property
      owner’s property insurance policy covering the residential structure on which
      the panels are attached. As an alternative to this requirement, the lender may
      verify that the owner of the solar panels is not a named loss payee (or named
      insured) on the property owner’s property insurance policy; and • in the event
      of foreclosure, the lender or assignee has the discretion to ⚬ terminate the
      lease/agreement and require the third-party owner to remove the equipment; ⚬
      become, without payment of any transfer or similar fee, the beneﬁciary of the
      borrower’s lease/agreement with the third party; or ⚬ enter into a new lease/agreement
      with the third party, under terms no less favorable than the prior owner. Any
      exceptions to coverage on the title insurance policy for recorded instruments
      relating to the solar panels must comply with B7-2-05, Title Exceptions and
      Impediments. Uniform Appraisal Dataset (UAD) 3.6 Policy Lenders using UAD 3.6
      must follow the requirements in the UAD 3.6 Policy Supplement . Recent Related
      Announcements The table below provides references to recently issued Announcements
      that are related to this topic. Announcements Issue Date Announcement SEL-2025-08
      October 08, 2025 Announcement SEL-2025-04 June 04, 2025 Published May 6, 2026
      264 Announcements Issue Date Announcement SEL-2023-09 October 04, 2023 Announcement
      SEL-2020-07 December 16, 2020 Announcement SEL-2020-05 September 02, 2020 Announcement
      SEL-2020-04 August 05, 2020'
  judgment: false
