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Residential Loans: Non-Warrantable Condominium Financing

What is non-warrantable condominium financing?

  • Under Fannie Mae and Freddie Mac’s guidelines, condominiums fall into two general categories: warrantable and non-warrantable.
  • Units in low-risk condominium projects are considered “warrantable,” and mortgages secured by such units are eligible to be purchased or backed by Fannie Mae or Freddie Mac.
  • However, units in higher-risk buildings (e.g., condos with higher default rates or condos consumed with lawsuits involving the association) are considered “non-warrantable”.
  • Fannie Mae and Freddie Mac will not purchase or securitize mortgages secured by units in non-warrantable condo projects.
  • Therefore, due to the risk involved, lenders typically impose stricter requirements for non-warrantable condominiums.

Sample loan programs for non-warrantable condominiums

Many lenders will not even consider non-warrantable condominiums to be eligible for their loan programs, but when they do, typical provisions may include:

  • Maximum loan-to-value ratio: This can range from around 70% to 80%.
  • Maximum loan amount: This can be as high as $5 million on a case-by-case basis.
  • Other lender requirements: These miscellaneous terms can vary greatly. For example, some lenders require that only a maximum of 20% of the condominium project can be owned by any single owner/investor entity. (Or, if the project has fewer than ten units, there can be a maximum of two units owned by any single owner/investor entity.) Other lenders will not consider non-warrantable condos that have certain structural deficiencies, certain pending litigation, low homeowner association budget reserves, or a high percentage of units in foreclosure.

All items are subject to change and vary from lender to lender. Call David A. Krebs at 321-239-2781, click here to submit a message, or click here to book a call.

Sample success stories

Learn how we’ve helped families and individuals obtain loans for non-warrantable condos in Florida. Go to our “Success Stories” page and filter by “Residential Non-Warrantable Condominium Financing”.