FLORIDA NON-WARRANTABLE CONDO LENDERS – Warrantable vs Non-Warrantable Florida Condos
Thinking about buying a Florida condominium? The first thing you will need to determine is whether you are buying a “warrantable” or “non– warrantable” Florida condo. The only way to find out the financing on a Florida condo is to have a condo questionnaire completed if it’s not already on one of the approved Florida condo lists listed below!
What type of financing I can get on a Florida Condo?
- First, you need to find out of your condo is on one of the Florida condo-approved lists.
- Check MLS to determine what loan to value other units in the building have sold for. This gives us an idea of what your minimum downpayment could be. Some units are call only and are not financeable!
- FHA Mortgage Loans, we check the FHA Approved List.
- VA Mortgage Loans, we check the VA Approved List.
- For Conventional Loans such as Freddie & Fannie, we check the Fannie Mae Approved Condo List.
- If the condo project is not listed on the FHA list, then we will request an FHA mortgage review.
- If the condo project is not listed on the VA list, then we will request a VA mortgage review.
- If the condo project isn’t listed on the Fannie Mae approved list, then we will do a Fannie Mae full condo review.
- If the condo project doesn’t meet the Full review, then we will request a Fannie Mae limited condo review.
Expiration for Florida Condo Project Reviews
Project reviews must meet the following timeline requirements.
| Project Review Process Employed | Expiration of Project Review |
|---|---|
|
Must have been completed within (1) one year prior to the note date |
| Full Review for New Projects | Must have been completed within 180 days prior to the note date |
| Approved by Fannie Mae as reflected in CPM | Must be valid (unexpired) as of the note date |
| Approved by FHA | Must be valid (unexpired) as of the note date |
Florida condos Eligible for a Limited Review
The following table describes the transactions that are eligible for a Limited Review.
| Limited Review Eligible Transactions -Attached Units in Established Condo Projects | |
|---|---|
| Occupancy Type | Maximum LTV, CLTV, and HCLTV Ratios |
| Principal residence | 90% |
| Second home | 75% |
| Investment property | 75% |
Florida condo loans must be delivered to Fannie Mae within 120 days following the note date. When the elapsed time between note date and delivery date exceeds this limit, the Florida condo mortgage lender may deliver the loan only if the project continues to meet Fannie Mae project eligibility requirements at the time of delivery.
Florida condo loans secured by units in a project that fails to meet Fannie Mae’s project eligibility requirements under the applicable review type as of the note date are eligible for delivery after the project comes into compliance with the eligibility requirements (provided all standard mortgage seasoning and other applicable requirements are met). For example, if a lender closes a loan in a new project for which the pre-sales are less than the pre-sale requirement, the lender may deliver the loan after the project’s pre-sales meet the Fannie Mae requirement (assuming the loan meets all other applicable requirements).
Differences Between A Limited Condo Review & Full Florida Condo Review?
Fannie Mae/Freddie Mac offers 2 condo approval options. These review options are Limited Review & Full Review. A Limited Florida Condo Review is a streamlined review process with a large downpayment.
a Full review offers a higher loan to value with a lower downpayment.
Limited Review programs are several times more likely to be approved than those submitted under the Full Review program.
What is a Full Florida Condo Review?
The Fannie Mae full review requires that we review the condo association’s budget and our condo questionnaire; it’s that simple. This process isn’t complicated, and we get this done within the first couple of days from the time you get an executed purchase contract.
Florida Condominium Full Review Requirements
Below is a list of the most common items that can cause a Fannie Mae & Freddie Mac Full Condo Project Review to be denied.
- The current year-approved budget must show that 10% of the operating expenses are to be allocated to a reserve account.
- A reserve study in lieu of 10% reserves allocated from the current year budget may be considered if prepared within the past 24 months by an independent 3rd party with expertise in Condominium Project Reserves.
- No more than 15% of the unit owners may be more than 60 days delinquent on their monthly HOA dues or special assessments.
- No one person or entity can own more than 20% of the total units.
- Small 1-4 unit condo projects are eligible as long as no individual owns more than 1 unit.
- 5-20 unit condo projects are eligible as long as no individual owns more than 2 units.
- Commercial space can’t exceed 35% of the total project.
- Litigation against the developer or contractor that is named as a party that relates to the safety, structural soundness, and habitability is not allowed.
- Pending litigation “litigation concerning localized damage to a unit in the project that does not impact the overall safety, structural soundness, habitability, or functional use of the project” is acceptable
- Pending litigation when the amount of the claim is known is acceptable.
- Investment properties ONLY, No more than 51% of the units can be investor-owned.
What is a Fannie Mae Limited Review for Florida Condo Mortgage Loan?
A Fannie Mae limited review only requires that the project meet a few requirements listed below, Fannie Mae allows this because the down payment requirement is higher.
- The developer has transferred control of the association to the individual unit owners.
- The project must be 100% complete, with no additional phases to be built.
- At least 75% of the total units are sold and closed.
- Must not be a condotel or have condo-hotel type amenities such as a rental desk.
- No one entity can own more than 75% of the units.
- Small 1-4 unit condo projects are eligible as long as no individual owns more than 1 unit.
- 5-20 unit condo projects are eligible as long as no individual owns more than 2 units.
- Commercial space can’t exceed 35% of the total project.
- Litigation against the developer or contractor that is named as a party that relates to the safety, structural soundness, habitability is not allowed.
- Pending litigation “litigation concerning localized damage to a unit in the project that does not impact the overall safety, structural soundness, habitability, or functional use of the project” is acceptable
- Pending litigation when the amount of the claim is known is acceptable.
Condo Limited Review Down Payment Requirements
- Primary Residence 10%
- Second Home 25%
- Investment Properties25%
What Are Non-Warrantable Condominium Mortgages?
A non-warrantable Florida condominium is a condominium building that does not conform to Fannie Mae and/or Freddie Mac condominium mortgage guidelines and cannot be financed through a conventional loan program. The main reason why a condominium is classified as a non-warrantable condominium unit is that 51% or more of the condo units are not owner-occupied or the Subject Condo has litigation. In order for a condominium unit to be classified as a warrantable condominium, it needs to have 51% of the condominium owners live in the condominium as owner-occupant and the condo must be free of litigation. Non-warrantable condos are 51% or more investor-owned and are rental condominium units.
WARRANTABLE FLORIDA CONDO LENDERS
When a Florida condo is identified as a warrantable that means it meets Fannie Mae’s and Freddie Mac’s conventional guidelines and Fannie Mae and Freddie Mac will buy the loan. Typically, a Florida condo is considered warrantable if, for instance:
- No single entity owns more than 10% of the condo units in a project, including the developer
- At least 51% of the condo units are owner-occupied
- Fewer than 15% of the condo units are in arrears with their association dues
- There is no litigation in which the condo homeowner’s association (HOA) is named
- Commercial space account for 25 percent or less of the total condo building square footage
NON-WARRANTABLE FLORIDA CONDO LENDERS
A Florida non-warrantable condo is a condo property in which the loan is not eligible to be sold to Freddie Mac or Fannie Mae, and as such, Florida mortgage lenders for this type of property is considered by most banks to be more “risky.” Freddie Mac and Fannie Mae would consider a condo to be “non-warrantable” if, for instance, the condo:
- Does the FL condo development which has yet to be completed
- Does the FL condo development which allows for short-term rentals
- Does the FL condo development where one person or entity owns more than 10% of all units
- Does the FL condo development where less than 50% of the occupants in a complex are the owners
- Does the FL condo development involve in litigation of any kind regardless of whether the building is suing another party, or is the party being sued?
Some of the common Florida condo types which fall into the non-warrantable category include condo hotels, timeshares, fractional ownership properties, and other projects which require owners to join an organization, such as a golf club. Florida non-warrantable condo lenders is an expert in providing residential mortgage loans for non-warrantable condos and have been active in this business for over 10 years. We have excellent non-warrantable condo loan programs and rates for loans of this type. Please contact us for your current financing needs.
Using Condotels & Condos As Rental Units
A condo or condotel unit owner can enjoy the unit as a second or vacation home for months out of the year and can rent out the unit the remaining time of the year he or she does not use it. Condos and Condo-Hotel management staff rent out the condotel unit if you are a member of the Condo-Hotel Rental Program for condotel unit owners.
How Condo-Hotel Owners Make Revenue While Enjoying Condotel Unit
The great part about being a condotel unit owner is that the Condo-Hotel management staff can take care of your condotel unit and rent out your condotel unit not for a monthly fee but for a percentage of the rental income your unit receives. For example, if your condotel rents for $200 per night, the Condo Hotel management will collect the $200 and take a percentage of the $200. The amount they take depends on the Condo Hotel complex but normally the Condo Hotel complex takes anywhere between 30% to 50%. If the condotel unit does not rent, you are not liable to pay anything
Non-Warrantable Condo Loans Condominium Mortgages
Condotel loans And Non-Warrantable mortgage loans came to an abrupt halt after the 2008 real estate and credit meltdown and most Condo-Hotel unit owners have given up on looking for a portfolio mortgage lender who can do condotel and non-warrantable condominium mortgage loans. If you want to purchase a condotel unit or a non-warrantable condominium or are interested in refinancing your condotel or non-warrantable condominium unit, whether it is for a better rate or to do a cash-out refinance, the good news is that condominium mortgages and non-warrantable condo financing is becoming more readily available.
Lending Guidelines On Non-Warrantable Condominium Mortgages
Here are the general condominium mortgages And Non-Warrantable Condominium Unit Lending Requirements, however, every portfolio mortgage lender may have their own set of lending requirements. Portfolio lender that offers private mortgage loans amortized over 30 years.
Down Payment Requirements on Non-Warrantable Condominium Mortgages
Most portfolio lenders will require the following: a non-warrantable condominium requires an 80% loan to value on both purchase and refinance mortgage loans. Most condotel mortgage lenders require a minimum credit score of 600 FICO but prefer borrowers to have 700 FICO credit scores or higher. Condo Hotel Complex and/or Non-Warrantable Condominium Complex needs to be in good standing both financially and structurally. Loan sizes by most portfolio lenders range from $100,000 to $3,000,000 plus.
What Are The Comparison of Warrantable vs Non-Warrantable Condominium Mortgages
Since condotel loans and non-warrantable condo loans are portfolio loans and do not need to have to meet Fannie Mae or Freddie Mac Guidelines, the lending standards are set by the portfolio lender and the portfolio lender is the institution that sets the rules. Most portfolio lenders require one-year reserves for both the primary residence as well as the condotel unit and/or non-warrantable condominium unit. Again, this requirement is up to the individual portfolio mortgage lender.
Debt-to-Income Guidelines on Non-Warrantable and Condo-Hotel Financing
Debt to income ratios cannot exceed 50% which includes proposed Condotel or Non-Warrantable Condo Purchase as well as refinance mortgage loans. Reserves are required but do not have to be cash reserves. Retirement accounts, investment accounts, and other liquid accounts can be used as reserves. Typical reserves required that include P.I.T.I. (Principal, Interest, Taxes, Insurance) per each property the borrower owns.
US Mortgage Lenders is a full-service national lender with no overlays on government and conventional loans. has no lender overlays on FHA, VA, USDA, and Conventional Loans. Our team of licensed and support personnel are available 7 days a week, on evenings, weekends, and holidays. Borrowers who need to qualify for a mortgage with a national lender with no overlays can contact us for a faster response. Or email us at gcho@gustancho.com.Not all FHA Lenders have the same mortgage guidelines on condominiums.
