Is my condo non-warrantable?
At the time of purchase, your condo would be considered non-warrantable under Fannie Mae and Freddie Mac’s criteria since the entire complex is not complete. However, your condo becomes warrantable once these phases are complete.
What is a non-warrantable property?
Common non–warrantable properties include condotels, timeshares, fractional ownership properties, multi–unit condos (the condo unit itself is two units), condos in a permanent care/assistance residence, and other projects which require owners to join an organization, such as a golf club.
What is a non-warrantable condo or co-op unit?
There are fewer available programs for these dwellings. In general, a condo or co–op unit is considered non–warrantable if: In addition, a condo unit in a project involved in litigation of any kind is usually “non–warrantable.” This is true whether the community is the plaintiff or the defendant in the suit.
What is the difference between a warrantable and non-warrantable condo?
Fannie Mae and Freddie Mac use the term “warrantable” to describe condominium projects and properties against which they'll allow a mortgage. Condo projects and properties which don't meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable.
Which of the following must apply for a condo to be considered Warrantable eligible?
For a condominium complex to be considered “Warrantable,” it generally must meet the following requirements: Most of the units are owner occupied or second homes; not investment properties. 15% or less of the units can be 30 days delinquent on HOA dues. No more than 10% of a project can be owned by a single entity.
What is unwarrantable in real estate?
A high percentage of units are occupied by non-owners. The community allows short-term rentals. A single person or entity owns more than 10% of the total number of units. The building owner or developer is involved in litigation of any kind.
Why would a condo not be Fannie Mae approved?
What makes a condo ineligible for Fannie Mae approval? If the lender's review of the condo project (either limited or full) reveals any of Fannie's Mae's “ineligible characteristics,” the unit is not eligible for Fannie Mae financing.
How do you determine if a condo is Warrantable Fannie Mae?
Unfortunately, figuring out whether your condo is warrantable isn't an easy task. Fannie Mae and Freddie Mac don't keep a public list of approved projects. Instead, your lender (or a real estate agent, if you're selling) may have to order a condo project review to determine whether the property is warrantable.
Does Fannie Mae allow non-warrantable condo?
Since you won't be able to finance a non-warrantable condo using a loan backed by Fannie Mae, Freddie Mac, the FHA, or VA, there are more limited loan options for borrowers seeking to purchase these properties. The good news is there are lenders that offer mortgage loans for non-warrantable condos.
What makes a condo Fannie Mae Warrantable?
To put it simply, a warrantable condo is one that's approved by the two government-sponsored enterprises (Fannie Mae and Freddie Mac), as well as condos that are eligible for government-guaranteed financing (FHA and VA).
Is it harder to get a loan for a condo?
Financing the purchase of a condominium home is somewhat different than the process of buying a single-family home. For one, a condo mortgage usually comes with higher interest rates, and it can also be more difficult to qualify for thanks to additional underwriting.
What is Warrantable mean?
Justifiablewarrantable (comparative more warrantable, superlative most warrantable) Justifiable, just, proper. Authorized by warrant or right. Of animals: having reached a sufficient age to be hunted. quotations ▼ a warrantable deer.
What type of condo must have a full review?
The criteria for a full review is that the condominium needs to have 51% or more of its units be an owner occupant. This means it needs to be a warrantable condominium unit. Mortgage lenders do not want to see any more than 15% of the condo homeowners association dues delinquent for more than 30 days.
What is the owner occupancy requirement for condos Fannie Mae?
Financial institution-owned REO units that are for sale (not rented) are considered owner-occupied when calculating the 50% owner-occupancy ratio requirement.
Does Fannie Mae accept FHA condo approval?
Fannie Mae accepts delivery of FHA mortgage loans in FHA-approved condo projects that appear on the FHA- approved condo list.
What makes a condo Fannie Mae Warrantable?
To put it simply, a warrantable condo is one that's approved by the two government-sponsored enterprises (Fannie Mae and Freddie Mac), as well as condos that are eligible for government-guaranteed financing (FHA and VA).
What is Warrantable mean?
Justifiablewarrantable (comparative more warrantable, superlative most warrantable) Justifiable, just, proper. Authorized by warrant or right. Of animals: having reached a sufficient age to be hunted. quotations ▼ a warrantable deer.
What is the owner occupancy requirement for condos Fannie Mae?
Financial institution-owned REO units that are for sale (not rented) are considered owner-occupied when calculating the 50% owner-occupancy ratio requirement.
Does Bank of America do non warrantable condo?
Finding a non-warrantable condo lender Unfortunately, national lenders won't be interested in providing a loan for a non-warrantable condo. This includes lenders like Wells Fargo, Quicken Loans, and Bank of America.
What makes a condo non-warrantable?
Some companies will have their own overlays as to what is considered acceptable, but we’ll look at some of the most common reasons for a condo to get flagged as non-warrantable:
How much does a condo questionnaire cost?
It would seem that the most logical thing to do would be to get the condo questionnaire completed before even ordering the appraisal! Think about it, a condo questionnaire costs about $150 (sometimes free), and an appraisal costs $400 – $500. Wouldn’t it make sense to order the questionnaire first, to see if the home can even be financed to begin with?
What is HOA in construction?
Project (HOA, sponsor, developer) is in litigation that relates to safety, structural soundness, functional use or habitability of the project.
Does the Department of Veteran Affairs have condos?
The department of Veteran Affairs actually has their own list of approved condos. Again, not the easiest thing in the world to get on that list.
Does Fannie Mae buy conventional loans?
This is kind of a big deal because Fannie Mae and Freddie Mac pretty much buy all conventional loans. If they won’t give the thumbs up on the condo, you and the seller are in a bit of a tough position.
What does it mean when a condo is non-warrantable?
If a condo is non-warrantable, it means that it doesn’t mean some of the major requirements that the mortgage programs require. These requirements are in place in order to protect both you and the lender that funds the loan that helps you buy the condo.
Why buy a warrantable condo?
Your best bet is to find a warrantable condo to avoid the risk of being unable to sell it when you are ready to move. You’ll also avoid the risk of depreciation and just losing money on your investment. When you buy a home or condo, you want one that will appreciate and make you money on your investment down the road. You’ll also get more favorable financing terms, making the entire investment a better option.
What happens if you buy a condo with cash?
So what do you risk if you are able to buy the condo with cash or you find a lender willing to lend you money for it? First, it will likely be harder to sell the condo when you are ready to move. If the condo is non-warrantable when you bought it, chances are it will still be non-warrantable when you sell it unless some major changes took place. You are relying on the association making changes and/or ownership of the condos to change drastically; these chances are minimal which means resale will be difficult. You’ll need to find a buyer that was just like you – one that could either pay cash or find a willing lender that provides another financing than Fannie Mae or HUD loans.
Why do subprime lenders charge a lot for condos?
Again, because of the risk of default, subprime lenders often charge a lot for a loan on a non-warrantable condo. Even if they don’t have requirements for the condo, they know which developments in the area are non-warrantable and they will charge you accordingly. They know that the risk of default is high since the chance for resale is minimal. If you are able to sell the condo, oftentimes it ends up as a short sale (accepting less for the home than you owe). This is a risk for lenders, which is why the cost for the subprime loan could be excessive.
Why do you pay more for condo loans?
Because of the risk the condo poses, you’ll generally pay more for the loan. This could be in the form of a higher interest rate or more fees. Lenders need to make up for the risk of default that a non-warrantable poses by making the money upfront or through the higher interest rate every month.
Is it harder to buy a condo with a mortgage?
Buying a condo with mortgage financing is more difficult than buying a single-family home with a mortgage. You are at the mercy of the lender/mortgage program when choosing the condo development. Unfortunately, not all condo developments receive approval from the mortgage programs available today.
Why would a condo unit be considered non-warrantable?
When a condo is labeled as non-warrantable, it means that it does not meet conventional guidelines and will not be bought by government-backed entities like Fannie Mae and Freddie Mac. Many lenders consider financing a mortgage for this type of property to be too risky which can make it harder to finance.
What can I do if my condo is non-warrantable?
The good news is that you can still finance a non-warrantable condo if you can find a lender who offers non -warrantable loans.
Why is my condo getting flagged?
Some companies may have their own guidelines as to what is considered warrantable or not, but the most common reasons for a condo to get flagged include: The project is new construction and/or has yet to be completed.
Why are condos so popular?
Condos are the perfect homes for many reasons – they can open homeownership to different groups of people and can be an affordable way to live in an urban setting or vacation hot spot without buying an entire house. They are also a great way to own a home without worrying about maintaining and up-keeping the exterior of your home.
Who should be able to help you determine if a condo you are interested in buying is non-warrant?
Your realtor, lender , and condo’s management office should be able to have the resources available to help you determine if a condo you are interested in buying is non-warrantable.
What percentage of units are occupied by non-owners?
A high percentage of units are occupied by non-owners. The community allows short-term rentals. A single person or entity owns more than 10% of the total number of units. The building owner or developer is involved in litigation of any kind.
What is a warrantable condo?
For a condo to be warrantable, the condo project has to meet an extensive list of requirements laid out by Fannie Mae and Freddie Mac. Some of the restrictions may seem obvious. For example, the condo can’t be part of a timeshare and it can’t be part of a houseboat project.
Why is a condo not warrantable?
A condo may be non-warrantable because too many owners are delinquent on dues. It may be non-warrantable because the condo project sends insufficient money to its reserve fund for emergency expenses. Both symptoms reveal that the HOA may have cash flow problems.
How to find a portfolio lender for a condo loan?
You may find a portfolio lender by using the search term "non-warrantable condo loans." However, you may also want to work with a local mortgage broker who specializes in condo loans. When searching for non-warrantable condo loans, mortgage brokers may be able to help you obtain specialized financing that you wouldn't be able to secure on your own with most conventional mortgage lenders.
How much of a condo budget must be warrantable?
Warrantable condos must meet the following requirements at a minimum related to their ownership and governance. At least 10% of the annual budget must go to reserves. At least half of the units must be owner-occupied.
What is condo project?
A condo refers any unit that’s part of a condo project. A condo project is a residential real estate in which an individual owns certain unit, and the unit owner has an economic interest in the common areas held by an owner’s association. Condo ownership structures vary. Owners may have a deed to a unit in a single building as in ...
What to ask when buying a condo?
If you’re thinking about buying a condo, ask your real estate agent whether it is warrantable. They should be able to tell you upfront; if they don't know, they can assist you in finding out whether the development in question qualifies as a warrantable condo. If it doesn't, you may struggle to obtain financing for the condo.
What is the minimum down payment for a condo?
For example, a condo requires a minimum down payment of 10% in most cases, instead of 3% like a detached single-family home. Interest rates on condo mortgages tend to be higher than comparable single-family homes.
What is a non warrantable condo?
A non-warrantable condo with Fannie Mae, the government entity that securitizes mortgages, is one that does not meet the guidelines for financing eligibility. The condominium complex as a whole is not warrantable, meaning that lenders see it as a high-risk property and one less likely to maintain future value.
How much of a condo is warrantable by Fannie Mae?
These include a high percentage of owner-occupied units, at least 90 percent of units being occupied in established or existing projects, 70 percent pre-sold units in new or newly converted units, and a maximum of 15 percent of units being 30 days or more delinquent on HOA dues. Additionally, no more than 10 percent of a complex can be owned by a single person or entity, and no more than 20 percent of the units can be used for non-residential space.
What is a non-warrantable condo?
Non-warrantable condos are usually properties like time shares, condo hotels (condotels) and buildings that require owners to join an organization. You can read more about what makes a condo non-warrantable on Fannie Mae’s website here.
Can a mortgage broker buy a condo?
Many mortgage brokers will not lend to a buyer of a non-warrantable condo since Fannie Mae and Freddie Mac won’t buy those mortgages. Unfortunately, this limits the borrowing options for potential homeowners seeking a condo mortgage loan. The remaining lenders look at non-warrantable condo loans as an increased risk, and will typically only offer financing at high interest rates with large down payment requirements.
Does Blue Water Mortgage have warrantable condos?
At Blue Water Mortgage, we also have a number of alternative financing options for non-warrantable condo loans. If you need help securing a loan for your warrantable condo, or need options for a non-warrantable property, contact one of our loan experts today. We’re happy to answer any questions you may have – even during the weekends!
Does the Department of Housing and Urban Development keep a database of warrantable condos?
The Department of Housing and Urban Development also keeps a database of warrantable condos that will be applicable for an FHA loan . This resource is also available for VA loans here.
Is a condo warrantable?
Whether a condo is warrantable or non-warrantable changes on a semi-regular basis as ownership changes and tenants move in and out. So, just because a condo isn’t warrantable now, doesn’t mean it won’t be in the future!
What is warrantable condo?
A warrantable condo typically gets you lower mortgage rates than a non-warrantable condo. Warrantable condos create lower risk for the bank.
What is a non warrantable mortgage?
Fannie Mae and Freddie Mac use the term “warrantable” to describe condominium projects and properties against which they’ll allow a mortgage. Condo projects and properties which don’t meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable.
What are the requirements for a condo loan?
Some of the new basic requirements for an FHA condo loan now include: The borrower must meet “standard” FHA mortgage guidelines. At least half of a project’s unit must be owner-occupied. In a newly-built project, at least 70% of the units must be sold.
What happens when you buy into a condominium?
When you buy into a condominium community, mortgage lenders apply extra scrutiny to the application — both you and your future HOA must comply with a set of underwriting guidelines.
What is a conforming mortgage?
Conforming mortgage rules for condos. The majority of home buyers use “conforming” mortgage financing. This means that their loan purchased by one of two government-sponsored entities — Fannie Mae or Freddie Mac — and that the loan meets the two group’s minimum standards.
How to get a condo approved for financing?
If possible, ask your real estate agent for help in recruiting the HOA/condo association to assist you in getting the property approved for financing. Be sure the association provides all the numbers and paperwork the lender requests.
Who can help you navigate the condo financing maze?
The most experienced and professional mortgage lenders can help you navigate the condo financing maze. A mortgage lender who’s looking out for your best interest can help you beat the system. With condos and co-ops, it’s not just your creditworthiness the lender has to worry about.
