Warrantable Versus Non-Warrantable Condominium

Warrantable Versus Non-Warrantable Condominium Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will cover warrantable versus non-warrantable condominium mortgage guidelines. It is important to understand the difference between warrantable and non-warrantable condos for condominium homebuyers. A warrantable condo can turn into a non-warrantable condo complex.

Whether it is a warrantable versus non-warrantable condominium, the only way you can differentiate is by the occupancy type. Warrantable and non-warrantable condos look no different from the exterior. In the following paragraphs, we will cover the difference between warrantable versus non-warrantable condominium loans.

What Is a Non-Warrantable Condominium?

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The definition of a warrantable condo complex is when 50% or more of its occupants are owner-occupants. A condo complex can become a non-warrantable one if 50% or more of the occupants are rentals and not owner-occupants.

Gustan Cho Associates has condo financing loan programs for both warrantable and non-warrantable condos. In this article, we will discuss and cover warrantable versus non-warrantable condo mortgage guidelines.

Condominium Financing With Conventional Loans

Which means housing financing through conventional loans

The condo complex needs a warrantable condo unit to qualify for government and conventional condominium loans. We will discuss the Agency Warrantable Checklist for Established Condominiums to determine whether or not the condo complex is warrantable.

Warrantable or Non-Warrantable Condominium depends on the occupancy type of homeowners. You cannot tell the difference between Warrantable and Non-Warrantable Condominiums just from looking at the complex. We will explain the differences between types of Condominium and Lending requirements and the differences between Warrantable Versus Non-Warrantable Condominium financing loans.

Difference Between Warrantable Versus Non-Warrantable Condominium Loans

The Warrantable Versus Non-Warrantable Condominium is warrantable condo with 51% or more residents living in the condo complex who are owner-occupants. If the ownership in the condo complex is 51% or more non-owner occupants, it is classified as non-warrantable.

FHA, VA, Fannie Mae, and Freddie Mac do not originate and fund non-warrantable condos. Gustan Cho Associates Mortgage Group has non-warrantable condominium financing. Fannie Mae and Freddie Mac require warrantable condos only on conventional loans.

Housing Types Not Considered Non-Warrantable Condos

The following condo complexes are exempt from Warrantable Versus Non-Warrantable Condominium Guidelines:

  • Detached Condominiums
  • Condo units in a condo building that consists of 4 or fewer units
  • Fannie Mae limited cash outs currently owned by Fannie Mae (same applies to Freddie Mac)
  • It cannot be a condotel unit

Limited Review Versus Full Review

Whether or not a lender will request a limited versus full review depends on whether the condominium buyer and complex meet certain financial standards. The condominium complex needs to be an established complex with plenty of reserves.

All primary residences with a 20% down payment on condos are limited review. The loan-to-value is 90% Loan-To-Value on primary residences may qualify for limited review, but that depends on the lender. The second home loan-to-value is 75% loan-to-value. Investment homes loan to value is 70% LTV.

How Are Condos Determined Whether They Are Warrantable Versus Non-Warrantable

The documents required for a limited condo review are the following:

  • Limited or Short Form Questionnaire provided by the lender
  • Master insurance policy of the condo project
  • Full Review (for LTVs that exceed the above parameters)

The condo complex is considered an established condo complex that meets the following requirements:

  • At least 90% of total units are occupied
  • The condo complex is not under construction, and the project is 100% complete
  • The project is not subject to additional phasing and annexation
  • The Condominium homeowners association has been transferred to the condo unit owner

Full Review Guidelines By Lenders

The following mortgage documents are required for a FULL Condominium Complex review. Condominium Questionnaire provided by the lender. Budget and balance sheet of the condo complex. Bylaws and declarations of the condo complex. Master insurance policy and declarations of the condominium project. Fidelity bond, if applicable, for condo complexes exceeding 20 or more units.

Condominiums That Do Not Qualify Under Fannie Mae and Freddie Mac

Which apartments are not eligible for Fannie Mae / Freddie Mac

The following condo complexes do not qualify for Fannie Mae/Freddie Mac Conventional Condo Loans:

  • Condos in a condo-hotel project
  • Complexes consisting of Manufactured Housing
  • Condo project with mandatory membership dues
  • Condo Units smaller less than 400 square feet

Condominium complexes that the homeowner’s associates are being named in a pending lawsuit.

Best Mortgage Lenders For Warrantable and Non-Warrantable Condominiums

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Gustan Cho Associates can help borrowers with warrantable and non-warrantable condominiums and condotel units. Please contact us at Gustan Cho Associate at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates are experts in helping condo buyers qualify for either warrantable or non-warrantable condominium units.

Gustan Cho and his team of veteran mortgage professionals are ready to answer any questions home buyers or homeowners with mortgage inquiries. Gustan Cho Associates Information Resource Center is a group of real estate and mortgage industry experts, which includes the following: real estate agents, residential mortgage loan officers, and industry experts whose mission is to provide information about real estate, conforming loans, non-conforming loans, and specialty financing programs. The mortgage industry is so complex, with new regulations constantly changing. New rules and regulations are being implemented, and our goal is to express the opinions of industry experts and offer their opinion.

We are also very experienced in financing condotel units. Gustan Cho Associates has a reputation for not having any lender overlays. We also have dozens of lending partnerships with dozens of non-QM and alternative financing wholesale lenders. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.

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