Condominiums add another layer of mortgage underwriting criteria that Single Family Homes, Townhomes and Villas don't have. Normally if someone wants to purchase, for example, a single family home, the mortgage underwriter has to evaluate the creditworthiness and in most cases the income qualification of the borrower.
When you buy a condominium, your mortgage underwriter also has to evaluate the entire condominium building. Does the building have adequate insurance? Is the building involved in litigation? Does it set aside at least 10% of its budget for reserves? These are just a few questions mortgage underwriters look at when evaluating a condominium building.
Guidelines vary and change from time-to-time but the common issues that make a condo non-warrantable are usually one or more of the following:
The Building doesn't collect or allocate from its budget at least 10% towards reserves
A Single person or entity owns a large percentage of the total units
The association is involved in litigation that affects the safety and soundness of the building or the financial viability of the association
There are condo-hotel characteristics in the building like rental desk on the premises
Less than 50% of the units are owner occupied
A large number of unit owners are 60 day or more late on their maintenance payment
There is a large percentage of commercial space present in the building
The building has insufficient insurance coverage
The above is not an exhaustive list and guidelines change from time-to-time so it's best to check with us or with your current loan officer about the condominium's eligibility to finance it as warrantable or non-warrantable condominium.
Both Fannie Mae and Freddie Mac backed loans are good options, you simple have to apply with a mortgage company, preferably a mortgage broker. Mortgage brokers have to pass higher educational, testing and training requirements than traditional bank employees offering mortgages and are highly likely more knowledgeable in various financing options. Mortgage brokers also have many more loan options than traditional banks and their use is more economical in the majority of cases.
Speak to us about your non-warrantable condo mortgage financing. We have over a decade experience in financing these properties and offer multiple loan options for them