What does it mean if you want to buy a condo but it’s non-warrantable? You want a mortgage, but you may have heard you can’t get financing for a non-warrantable condominium. If you’ve found a condo you love in the neighborhood you want, but get the news that it’s “non-warrantable,” can you still get a home loan to buy it?
What Does It Mean If a Condo Is “Non-Warrantable”?
This term refers to criteria established by Fannie Mae and Freddie Mac, the two main agencies that buy conventional mortgages from the original lenders, usually a bank. Both of these agencies have requirements for condominium projects as a whole to be eligible for financing that qualifies for their programs.
One way a condo could be “non-warrantable” is through owner payments to the Homeowners’ association. If more than 15% of owners are behind on their HOA payments, then a condo in that association is non-warrantable. At least half of the condos in an association must be owner-occupied for the condos to be warrantable, also. Condo projects that require a membership, for example, golf clubs or country clubs, aren’t warrantable.
Fannie Mae and Freddie Mac don’t keep ongoing lists of which condominiums are warrantable, but you can find lists of condos that qualify for FHA or VA loans. If the condo is on these lists, it’s very likely to be warrantable as the lists have similar criteria.
Lenders will order a project review to determine if a condo is warrantable or non-warrantable as neededHow do you get a loan for a non-warrantable condo?
You’ll need to work with an independent mortgage broker who has access to direct lenders, also called portfolio lenders, who may specialize in non-warrantable condo loans. You’ll have an easier time finding these opportunities if you work with an experienced mortgage loan professional who can offer you a variety of financing options, all in one place. So you are completing a single mortgage loan application and the independent mortgage broker working on your side is able to filter through dozens of wholesale channel portfolio lenders that lend on non-warrantable condos and select the best-fit lender for your unique situation. Call or email us here at California Platinum Loans for more information on these and many other loan products.