Before you get your heart set on one particular condo, do you know if it’s classified as Warrantable or Non-Warrantable? We’ve got all of your questions answered below!

To be classified as a Warrantable condo, 51% or more of the condo owners need to live in the condo complex. A condo project that is considered Non-Warrantable is a complex that has over 51% of the units as rentals.

Condominium loans are stricter than single family home mortgage loans because not only does the condo unit buyer needs to qualify for a condo loan but the condominium complex also needs to qualify • The condo complex needs to meet the lender’s lending guidelines and standards • Condominiums are viewed riskier to mortgage lenders • Lenders have higher credit standards apply for condominium mortgage loans.

The mortgage loan originator should provide the buyer with a condominium questionnaire to have the condo homeowners association manager to complete and sign • The mortgage loan originator should get clearance from the mortgage underwriter whether the condominium complex is a Warrantable condo • If it is not, then condominium cannot be done as a conventional loan and needs to find a Non-Warrantable condo mortgage lender • Fannie Mae and Freddie Mac will not purchase condominium mortgage loans that are Non-Warrantable condo projects. The only way you will get financing on a Non-Warrantable condo unit is through a portfolio lender.

• Minimum 20% down payment • Minimum credit score of 680 • Minimum loan size of $100,000

• Condo with 500 square feet, has one bedroom, and has a functional kitchen • 30-year loan program, adjustable mortgage rate loans only (3/1 ARM, 5/1 ARM, 7/1 ARM) • Maximum 40% debt to income ratio and one year reserves for both the primary property (if the condo is a second home or vacation home) and the new Non-Warrantable condo unit.

If you have any questions, contact your local mortgage lender today!

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