Non-Warrantable Condo Mortgages

Non-Warrantable Condo Mortgages - condo by body of waterNon-warrantable condos are those condos that are part of an association that does not meet Fannie Mae and Freddie Mac rules for condo eligibility.

As there are many rules, there are many reasons why a particular condo could be non-warrantable.

The most common ones are: less than 10% of association revenue goes to reserves, too many units are owned as investments, the association is involved in litigation.

There are, of course, lenders that lend against such units.  Usually, they don’t mind if one or two rules are broken.  Some lend if all rules are broken.

Borrowers interested in financing such a unit need to make sure that the lender that advertises that they do non-warrantable condos, does non-warrantable condos with the particular issue that unit has.

Most lenders that lend against non-warrantable condos do not mind the reserve rule being broken or the occupancy rule.  Some mind more than others.

Yes, a lender that advertises non-warratable condo mortgages will lend against an association that puts at least 8% into the reserves, for instance, while another is fine with only 5%. (Fannie Mae, remember, wants 10).

Again, it is important to talk to lenders early in the process of buying a non-warrantable condo.