Non Warrantable Condo Loans
Purchasing a condo is a bit different than buying a single family home. There are associations to deal with, common areas and lenders often impose different guidelines for condos.
Lenders not only need to feel comfortable financing the unit you plan to purchase, but they are also concerned with the condition and financial stability of the entire condo complex.
In some instances, lenders prefer not to finance non warrantable condos. In this article, we will review the differences between a warrantable vs non warrantable condo and where you can get financing.
What is a Non Warrantable Condo?
A non-warrantable condo is one that does not fit the Fannie Mae, Freddie Mac or government guidelines for warrantable condos.
In general, the following types of condos are considered to be non-warrantable:
- Time shares
- Condos in assisted living facilities
- Fractional ownership properties
A condo is considered to be non warrantable if:
- More than 50% of the units are rented and not occupied by the owner
- If the condo project is still under construction
- If the homeowner’s association is not under the control of the condo owners
- Less than 85% of the units are current on their homeowner’s association dues
- The homeowner’s association is part of a law suit
- More than 35% of the square footage is commercial space
If the condo you are looking at falls into any one of these categories, then you may need to speak with a non warrantable condo lender. Meanwhile you can read the Fannie Mae description of a non warrantable condo
Non Warrantable Condo Loan Programs
If you are purchasing a warrantable condo, then you can get a conventional mortgage, an FHA, or any other government loan. However, if the condo is non warrantable, then those loan programs will not apply and you will instead need to find a Non QM (non qualified) mortgage.
A non qualified mortgage is one that is offered by special lenders who offer niche products to help solve for difficult lending scenarios. These would include financing for bad credit, mortgages after a bankruptcy, self employed mortgages, and even a scenario where the subject property is a non warrantable condo.
FHA Loans for Non Warrantable Condos – FHA guidelines for condos stipulate that at least 51% of the properties must be owner occupied. If you have your heart set on financing your condo with an FHA loan, it would be good to speak with an FHA lender before making an offer.
Non Warrantable Condo Lenders
Non warrantable condo lenders are really Non-QM Lenders or some instances Portfolio Lenders. These lenders are typically not found in your neighborhood. Instead, they are lenders who specialize in niche mortgage programs. Below is a short list of just a few lenders who offer non warrantable condo loans.
- First National Bank of America
- Mortgage Depot
- Sprout Mortgage
- PennyMac Loan Services
- The Federal Savings Bank
Keep in mind these are just a few of the lenders who offer non warrantable condo loans. Each of them have different guidelines and requirements. We also work with other lenders who may be better suited for your needs. Complete our loan scenario form to get a quote without pulling a credit report.
Non Warrantable Condo Rates
The rates for non warrantable condos will be about the same as if you were financing a single family residence. Keep in mind that some lenders do have a very small rate adjustment for non warrantable condos. However, that adjustment would be very small and should not prevent you from moving ahead with your non warrantable condo purchase.
Non Warrantable Condo Refinances
Lenders also offer refinances and cash out refinances for non warrantable condos. You may find the loan to value ratio up to 90% on rate and term refinances, and up to 85% for cash out refinances.
You will have the ability to use the funds for debt consolidation, remodeling or any other purpose.
How to find out if a condo is non warrantable
The best way to determine whether a condo is warrantable or non warrantable is to ask the listing real estate agent. You also can try this HUD condo lookup site to see whether the condo is on the approved list for warrantable condos. If it does not show up there, then you should continue with speaking with a realtor.
Non Warrantable Condos – Frequently Asked Questions
Is buying a non warrantable condo risky?
If financing for non warrantable condos becomes scarce, then it could drive the prices of those condos down. Although that is highly unlikely, there is a moderate amount of risk tied to that. However, if you plan to live in the condo for a while, then the value will eventually return.
Are there jumbo non warrantable condo loans?
Non warrantable condo loans are available in jumbo sizes up to $2 million depending upon the lender.
Do I need an inspection for a non warrantable condo?
You really should get a home inspection for any purchase regardless as to whether it is a single family residence, condo, or non-warrantable condo. In fact, if you plan to purchase a home using an FHA loan, then an inspection is required.
We are able to help you to find a non warrantable condo lender in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming