Full-Limited-Non Warrantable Condo Mortgage Lenders
Condos in Florida fall into 3 categories Full review, limited review, and Non Warrantable.
What’s the difference Between 3 Florida condo approval options?
Fannie Mae/Freddie Mac offers two categories of Condo Approvals: Limited Review & Full Review. If a condo fails a Full or Limited condo review it’s considered Non Warrantable. A Limited Condo Review is a streamlined program offered by Fannie Mae & Freddie Mac for condo loans these 2 are categorized as lower risk. Condominiums approved under the Limited Review program are several times MORE LIKELY TO BE APPROVED than those submitted under the FULL REVIEW program.
What if a condo is Not Limited or Fully approved? It’s NON Warrantable.
If a Florida condo does not qualify for a limited or full approval it’s considered “NON-warrantable” and is ineligible to be sold to Fannie Mae or Freddie Mac and does not qualify for lower interest rate mortgage options. To recap Florida condo mortgage lenders like to lend on Full and Limited review approvals condos because they can sell these loans. Borrowers benefit from the lower interest rates and more lenders make these loans because they can sell and recapture their funds to make more loans.
Full Review / Limited Review Down Payments
- [ 3% down payment ] – Full Review condos For Florida first-time home buyers. [ 15% down payment ]
- [ 5% down payment ] – Full Review condos qualify for a minimum 5% down payment.
- [ 10% down payment ] – Limited Review 75% 1st mortgage /15% HELOCK/ 10% Down payment.
- [ 25% down payment ]– Limited Review condos qualify for a minimum 25% down payment.
- [ 15%-20 down payment ] – Non-Warrantable Condo Lenders Florida
What Makes A Florida Condo Non-Warrantable or Unwarnatable?
- Structural deficiencies
- A high percentage of units are occupied by non-owners
- Incomplete construction of the subject phase
- Homeowners Association with NO reserves
- Homeowners Association limits the number of days the property can be accessed
- The project is new construction and/or has yet to be completed
- The developer has not turned over control of the HOA to the owners
- A high percentage of units are occupied by non-owners
- The community allows short-term rentals
- A single person or entity owns more than 20% of the total number of units
- The building owner or developer is involved in litigation of any kind
- Units without a stovetop and oven – must have both
Full Review / Limited Cash-out refinance options available:
The first step in the cash-out refinance process is to review your goals. This includes understanding your current mortgage balance compared to the estimated value and how much cash you need to take out to accomplish your goals. Assuming your goals look plausible we will proceed to the next steps.
Updated Florida Limited And Full Review Condo List
Warrantable and Non-Warrantable Florida Condo Lenders Serving All Florida. Florida Condominiums have their challenges, Florida mortgage lenders need to take a closer look at the viability of the project, including the condo questionnaire and condo budget before they will lend on it. This is where two types of reviews come into play: the Limited Condo Review and the Full Review process. A Limited Condo Review is a streamlined program offered by Fannie Mae & Freddie Mac for loans categorized as lower risk. Condominiums underwritten under the Limited Review program are several times MORE LIKELY TO BE APPROVED than those submitted under the Full Review program.
Limited Condo Review: What Types of Loans Are Eligible?
- Conventional Fannie Mae & Freddie Mac Loans
- Primary Residences & Second Homes Only (Investment Properties are ineligible).
- Available for Purchase, Rate & Term, and Cash-Out Refinances.
- Credit Score is not a consideration in determining Limited Review eligibility.
- Available only for loans meeting the following Loan-To-Value requirements:
Limited Review LTV/CLTV Requirements
(Florida Condo Properties)
- Primary Residence – Maximum of 75% 1st Mortgage. 90% Combined Financing on a 1st & 2nd Mortgage
- Second Home – Maximum of 70% 1st Mortgage. 75% Combined Financing on a 1st & 2nd Mortgage
- Investment Property – Maximum of 70% 1st Mortgage. 75% Combined Financing on a 1st & 2nd Mortgage
Limited Condo Review: Basic Florida Condominium Requirements
Streamlined Condo Reviews require less documentation and have easier project underwriting standards than Full Review approvals. Many lenders have additional requirements above and beyond what Fannie Mae & Freddie Mac require. For this reason, a condo loan may be denied by the major banks yet still eligible for approval by Florida Mortgage Lenders. Below is a list of some of the basic requirements a project must meet to receive a Limited Review Approval.
- HOA General Liability Insurance Coverage of at least 1MM required
- Fidelity Insurance is required for projects over 20 units
- Flood Insurance is required as determined by flood zone.
- Lawsuits involving structural litigation are not permitted (unless the lawsuit is over the recovery of costs for repairs already completed).
- Limited Review Condo Questionnaire confirming:
- No hotel services/nightly or weekly rentals/mandatory rental pool.
- No single entity owns greater than 10% of the units of the building.
- Small 1-4 unit condo projects are eligbile 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 does not exceed 25%
- For new condominium projects, 90% of the units must be sold and control of the HOA must already have been turned over to the owners.
Full Condo Review: Common Reasons for Denial
Full Condo Review requires extensive underwriting of the project. The additional items reviewed under the Full Review program ultimately result in the denial of many projects that would be approved under the Limited Review Program. Below is a list of the most common items that cause a Fannie Mae & Freddie Mac Full Condo Project Review to be denied.
- Association Budget & Balance Sheet
- The current year’s approved budget must show that 10% of the operating expenses are to be allocated to a reserve account.
- A reserve study instead 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 more than 50% of the units can be investor-occupied for Fannie Mae Loans.
- No more than 49% of the units can be investor-occupied for Freddie Mac Loans.
Should Apply for a Limited or Full Condo Loan?
There are several best practices to follow when shopping for condos & deciding whether to apply for a limited review or full review condo loan approval. Following this best practice list will help you evaluate which approval option your project is eligible for, and answer any uncover potential problems as early in the loan process as possible and enable you to change programs if necessary- before it’s too late.
- Click here To Review the Fannie Mae Florida Approved Condo List to Search Florida Fully Approved Condos in your Area.
- Do a quick Google search or ask your realtor whether the condo offers hotel services or centralized rentals.
- Ask for a copy of the approved budget BEFORE you make an offer. The budget is one of the most common reasons a condo project is denied under the Full Review program. It is usually very easily attainable at no cost from the seller’s realtor or the association and is a quick indicator of whether the project may be eligible for a Full Review approval or not.
- Ask for a copy of the insurance:
- Master
- Flood (if applicable)
- Fidelity (if the project has greater than 20 units)
- Law and Ordinance
The insurances are also typically relatively easy to obtain at no cost. A quick review of the insurance basics by a Florida Mortgage Lenders will let you know if there are any obvious deficiencies that would prevent eligibility for Limited or Full Review approval and require you to consider other non-traditional non-warrantable options.
- Ask for copies of any pending litigation the association is involved in.
- Your Florida Mortgage Lenders can review open litigation for cases pertaining to structural litigation or lawsuits that might threaten the liquidity of the operating budget which could impact the project’s approval.
- Order A Condo Questionnaire
- If the above items appear to meet guidelines, make sure a condo questionnaire is ordered at the beginning of the loan process. The association may charge anywhere from $250 – $500 for the Condo Questionnaire. The Condo Questionnaire will contain more detailed information impacting project approval. Obtaining this information at the start of the process will help you determine whether there are any problematic items early in the process.
- Make sure you select your insurance agent (for your HO6/Contents Policy) at the beginning of the process. Most Lenders will not submit the condo approval information to their condo review department until the complete package is put together. This includes your contents policy.
If you are financing in Florida and the condo is ineligible for a Full Review Approval, but you want or need to make a small down-payment for a purchase or have limited equity for a refinance loan, consult with a Florida Mortgage Lenders to consider splitting up the financing into a 1st and 2nd mortgage. Reducing the 1st mortgage LTV to 75% for a primary residence or 70% for a second home and taking out a 2nd mortgage may help you accomplish your goals and bypass Full Project Review requirements.
