Non-Warrantable Condo Mortgages 

Non-Warrantable Condo Mortgages 

 

What is a non-warrantable condo?

 

A non-warrantable condo is a condominium unit that does not meet the eligibility requirements for a traditional warrantable condo mortgage. The requirements for warrantable condos vary depending on the mortgage program, but generally, the project must meet certain criteria, such as being owner-occupied, having a certain percentage of units sold or under contract, and having adequate insurance and financial reserves. Non-warrantable condos, on the other hand, may have restrictions or characteristics that make them ineligible for traditional mortgage programs, such as a high percentage of investor-owned units, commercial space, or litigation involving the homeowners' association.

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Non-warrantable condos may still be eligible for financing through non-QM or alternative mortgage programs. These programs typically have more flexible guidelines and may allow for lower credit scores, higher debt-to-income ratios, and recent credit events such as bankruptcies or foreclosures. Non-QM lenders may also be willing to finance condos in projects that do not meet the requirements for warrantable condo financing, such as those with high investor concentration or commercial space. It's important to work with a knowledgeable mortgage broker who can help you navigate the options and find the right non-warrantable condo mortgage program for your needs.

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Overall, non-warrantable condos may offer unique benefits and opportunities for buyers and investors, but they may also come with additional risks and considerations. It's important to carefully evaluate the project and financing options and work with a qualified team of professionals to ensure a successful transaction. With the right guidance and expertise, non-warrantable condo financing can be a viable solution for those looking to purchase or refinance a non-traditional condo unit.

 

 

What does non-warrantable loan mean? 

 

A non-warrantable loan is a type of mortgage that does not meet the lending guidelines established by Fannie Mae or Freddie Mac, the two government-sponsored entities that provide liquidity to the mortgage market. Non-warrantable loans are typically used for properties that do not fit the standard lending criteria, such as condominiums, townhouses, or co-ops that have unique or unconventional features. In most cases, non-warrantable loans are riskier for lenders because they are not backed by the federal government and may have a higher risk of default.

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Non-warrantable loans are typically offered by private lenders, portfolio lenders, or non-QM lenders who are willing to take on more risk in exchange for potentially higher returns. To qualify for a non-warrantable loan, borrowers may need to have a higher credit score, larger down payment, and more cash reserves than they would for a conventional loan. Additionally, non-warrantable loans may have higher interest rates and stricter underwriting requirements than traditional mortgages. Despite these challenges, non-warrantable loans can be a useful financing option for borrowers who are looking to purchase a unique or unconventional property that does not qualify for traditional financing.

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What makes a building non warrantable?

 

A non-warrantable condo is a type of property that does not meet the lending guidelines of Fannie Mae and Freddie Mac, the two largest government-sponsored enterprises that provide mortgage financing in the United States. As a result, non-warrantable condos are considered more risky investments for lenders, which can make obtaining a mortgage more challenging for potential buyers.

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There are several factors that can make a building non-warrantable, including issues related to the building's financial stability, occupancy rates, insurance coverage, or ownership structure. For example, if a condo association has a high percentage of delinquent fees or has not budgeted enough for future repairs and maintenance, it may be deemed non-warrantable. Similarly, if a building has a high percentage of rentals or has a significant number of commercial units, it may not meet the requirements for a warrantable condo.

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Other factors that can make a building non-warrantable include pending litigation or construction defects, or if the developer still owns a significant percentage of the units. In some cases, a building may also be considered non-warrantable if it has not yet been completed or if there are still unsold units. As a result, potential buyers of non-warrantable condos may need to seek out alternative financing options or work with specialized lenders who have experience with non-warrantable condo mortgages.

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Which of the following must apply for a condo to be considered warrantable eligible?

 

In order for a condominium to be considered warrantable, it must meet certain eligibility criteria. Some of the key factors that must apply include the number of units that are owner-occupied versus rented, the amount of commercial space within the building, the percentage of units that are delinquent on their homeowner association fees, and the overall financial stability of the homeowner association.

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Additionally, the building must be in compliance with local building codes and have adequate insurance coverage. The condominium project must also meet certain investor guidelines set by Fannie Mae, Freddie Mac, and other government-sponsored entities. It's important to note that if a condominium project is not warrantable, it can be much more challenging to obtain a traditional mortgage to purchase or refinance a unit.

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If you are interested in purchasing or refinancing a non-warrantable condo, it's important to work with a mortgage broker that specializes in these types of loans. Non-warrantable condo mortgages often require additional documentation and underwriting, and may come with higher interest rates and more strict lending requirements. An experienced mortgage broker can guide you through the process and help you find the right non-warrantable condo financing option to meet your needs.

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Does Fannie Mae do non-warrantable condo?

 

Fannie Mae does not typically purchase or securitize mortgages for non-warrantable condos. However, there are some exceptions to this rule. Fannie Mae may consider purchasing a mortgage on a non-warrantable condo if it meets certain criteria, such as if the borrower is purchasing the unit as a primary residence, if the condo is a detached condo or if it meets specific project eligibility requirements. It is important to note that the requirements for Fannie Mae to consider a non-warrantable condo loan are strict, and not all non-warrantable condos will meet these criteria.

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In general, non-warrantable condo loans are not backed by Fannie Mae or Freddie Mac, but rather by private investors or lenders. These loans often come with higher interest rates and more stringent qualification requirements than warrantable condo loans. Borrowers interested in purchasing a non-warrantable condo may need to provide a larger down payment, demonstrate strong creditworthiness, and be able to show a solid financial standing in order to qualify for a loan.

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What are the down payment requirements for non-warrantable condo loans?

 

The down payment requirements for non-warrantable condo loans may vary depending on several factors, including the lender and the borrower's credit history. Here are some common down payment requirements to consider:

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• Non-warrantable condo loans usually require a higher down payment compared to traditional mortgage loans, typically ranging from 10% to 30%.

• Lenders may require a higher down payment if the borrower's credit score is low or if they have a recent credit event, such as a bankruptcy or foreclosure.

• Some lenders may allow the borrower to use funds from a gift or a down payment assistance program to cover a portion of the down payment.

• The down payment requirement may also depend on the specific non-warrantable condo project. If the project is considered higher risk, the lender may require a higher down payment to mitigate the risk.

It's important to work with a knowledgeable mortgage broker or lender to determine the down payment requirements for a non-warrantable condo loan, as each case may have unique circumstances.

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What is warrantable and Non-Warrantable?

 

Warrantable and non-warrantable refer to the eligibility of a condominium building for financing through conventional mortgage programs. A warrantable condo meets the lending guidelines set by Fannie Mae and Freddie Mac, which are government-sponsored enterprises that purchase mortgages from lenders. On the other hand, a non-warrantable condo does not meet the lending guidelines and is therefore not eligible for traditional mortgage financing.

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In general, warrantable condos have lower risk to lenders and are therefore easier to finance than non-warrantable condos. Non-warrantable condos typically require alternative financing options such as non-QM loans, which often come with higher interest rates and more stringent requirements. It is important for homebuyers to understand whether a condo building is warrantable or non-warrantable before applying for a mortgage, as this can affect their ability to secure financing and the terms of their loan.

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Here are some of the characteristics of Warrantable Condos

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• The condo project must have been completed and occupied for at least one year

• At least 51% of the units must be owner-occupied

• The budget for the homeowner's association must be adequately funded and be on track to remain funded for the next 12 months

• There must be no ongoing litigation against the condo project

• No single entity (such as a developer or investor) can own more than 10% of the units in the project

• The condo project must have adequate insurance coverage

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Here are the main characteristics of Non-Warrantable Condos

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• Non-warrantable condos are often located in high-end or unique buildings, such as those with a mixed-use designation or with commercial units.

• The condo association may have financial or legal issues, such as pending litigation or unpaid taxes, which can make the building non-warrantable.

• Non-warrantable condos may have restrictions on ownership, such as limits on the number of units that can be rented out or rules against short-term rentals like Airbnb.

• They may also have restrictions on financing, such as limits on the percentage of units that can be owned by one entity or individual.

• Non-warrantable condos may have higher interest rates and more stringent qualification requirements compared to warrantable condos.

• The down payment requirements for non-warrantable condo loans are typically higher.

• The appraisal and underwriting processes for non-warrantable condo loans may be more complex and time-consuming.

• Non-warrantable condos may be more difficult to sell or refinance, which can limit the options for owners looking to move or access their home equity.

 

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How do I know if a condo project is warrantable or non-warrantable?

 

Determining if a condo project is warrantable or non-warrantable can be a bit complicated, but there are a few factors to consider. Here are some of the key indicators that can help you determine whether a condo project is warrantable or non-warrantable:

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• Owner-occupancy rate: Lenders prefer condo projects where a high percentage of the units are owner-occupied, typically at least 50%.

• Delinquency rate: Lenders also look at the percentage of owners who are delinquent on their HOA fees or assessments. This rate should be low, typically below 15%.

• Investor concentration: Condo projects with a high percentage of investor-owned units may be considered non-warrantable. Some lenders may require that no more than 50% of the units in a project are investor-owned.

• Litigation: Condo projects that are involved in ongoing litigation, such as construction defect suits, may be deemed non-warrantable.

• Budget and reserve study: Lenders will review the condo project's budget and reserve study to ensure that it is financially stable and has enough reserves to cover unexpected expenses.

• Insurance coverage: Lenders will verify that the condo project has appropriate insurance coverage.

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To determine whether a condo project is warrantable or non-warrantable, it's recommended to consult with a mortgage professional at Bennett Capital Partners. As a company specializing in non-warrantable condo loans, they can pre-review the projects upfront and provide valuable guidance on the mortgage options available to you. Don't hesitate to reach out to their team to get expert advice and assistance.

 

Can I get a non-warrantable condo mortgage with bad credit?

 

While bad credit can make it more difficult to obtain a non-warrantable condo mortgage, it's still possible to secure financing with the help of a qualified mortgage professional. At Bennett Capital Partners, we specialize in non-warrantable condo mortgages and have experience working with clients with a variety of credit scores. We can help you explore your options and work with you to find a solution that fits your unique financial situation. Contact us today to learn more and to get started on your non-warrantable condo mortgage application.

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Can I get a non-warrantable condo mortgage if I am self-employed?

 

Yes, it is possible for self-employed individuals to obtain a non-warrantable condo mortgage. In fact, there are specific programs available for self-employed borrowers to help them qualify for a mortgage without having to use their personal tax returns. These programs include bank statement loans, profit and loss only, 1099 only, assets based loans, DSCR rental property cash flow loans, no ratio (no income, no employment), hard money, and private money programs.

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At our mortgage brokerage company, we offer a variety of programs specifically designed for self-employed individuals. These programs take into account the unique financial situation of self-employed borrowers, who may not have the traditional income documentation that is required for conventional mortgages. With our self-employed programs, personal tax returns are not required for qualification. Instead, other documentation such as bank statements, business financials, and other income streams can be used to determine eligibility.

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If you are self-employed and interested in obtaining a non-warrantable condo mortgage, it is important to work with a mortgage professional who has experience working with self-employed borrowers. At our company, we have the expertise and knowledge to help you navigate the mortgage process and find the right program for your unique financial situation. Contact us to learn more about our self-employed mortgage programs and how we can help you achieve your homeownership goals.

 

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Can I get a non-warrantable condo mortgage if I have a bankruptcy or foreclosure on my credit report?

 

Yes, it is possible to get a non-warrantable condo mortgage even if you have a bankruptcy or foreclosure on your credit report. In fact, our company offers a full range of Non-QM non-warrantable condo programs that allow recent credit events. These programs are designed specifically for borrowers who may have experienced financial difficulties in the past, but are now in a position to purchase a non-warrantable condo.

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Our non-warrantable condo programs take into account a variety of factors, including credit history, income, and assets. We understand that everyone's financial situation is unique, and we work closely with our clients to find the right mortgage solution for their specific needs. So, even if you have a bankruptcy or foreclosure on your credit report, we may still be able to help you secure a non-warrantable condo mortgage.

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If you're interested in learning more about our Non-QM non-warrantable condo programs and how they can help you get a mortgage despite recent credit events, please contact us today. Our team of experienced mortgage professionals will be happy to answer your questions and help you get started on the path to homeownership.

 

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