What happens when you can qualify for a loan—but the apartment you’re buying can’t?

Congratulations! You’ve been saving for years, and trudging through open houses. Now you’ve made your bid on an apartment and it’s been accepted. Your credit’s good, and so is your job situation; your bank’s preapproved you to get a mortgage, at a nice low rate. Your broker is even confident that you’re going to pass the co-op screening. No worries, right? Well, there’s this one little thing that’s been happening lately: “We’re not worried about the buyer qualifying—it’s the building,” says Corcoran’s Deanna Kory. That’s right: Even if you get approved, the apartment you want may not.

Consider one condo in the West Nineties that Kory has been trying to sell. It’s in a brick postwar with strong financials, lower-than-normal maintenance, and a fine transaction record. The apartment went into contract readily, only to be flagged by a bank because about 30 percent of the building’s units were rented out, either by the sponsor or by their owners. It had never been a problem before—and never mind that the rentals mostly contain loyal tenants who re-up each year. Another of Kory’s deals, this time in a co-op, nearly stalled when a lender, unhappy with the building’s level of insurance coverage, requested that it be raised. (It was.) “These are established buildings with ten, fifteen, twenty years’ track records,” says Kory. “[The sellers] have reason to be worried, because the banks have stringent and ever-changing requirements.”

What’s changed? Mortgage broker Julie Teitel points at new and much more stringent Fannie Mae guidelines. In new buildings, Fannie won’t accept loans until at least 50 percent of the building’s units are sold. In older co-ops, the sponsors—that is, the outside investors who own and eventually sell off the old rental units—can no longer hold more than 10 percent of the apartments. (Right now, Teitel is helping a client try to buy an East Eighties condo where a longtime sponsor’s holdings are stalling approval.) One Murray Hill building was bounced because it has too many sublets. Prudential Douglas Elliman’s Toni Haber says she’s run up against banks that simply don’t want to fund too many mortgages in one building, to spread their risk around.

Haber says she’s started prepping her clients, like Mike Martinovich, for such pitfalls. Martinovich, who manages the bands My Morning Jacket and Flight of the Conchords and is selling his apartment near Gramercy Park, says he was surprised by the demands but is sanguine about what’s fueling them. “I think it’s all for the greater good,” he says. “Banks themselves have less capital. They can’t afford to have a percentage of their loans go belly-up anymore.” He also says he’s probably headed for the suburbs.