Warrantable Vs. Non-Warrantable Condos: What You Need To Know

Do you dream of owning and living in a NOLA French Quarter condo right in the middle of the excitement of the Crescent City?

Or maybe you’re daydreaming of buying a beach condo you can rent out (when you’re not sneaking away to it) in one of the Gulf Coast’s charming beach towns?

Purchasing a condominium  — whether you plan to use it as your primary home, a second home, an investment property, or a vacation rental — may seem just as simple as purchasing a detached single-family home.

And in most cases, such as when the condo is considered warrantable, it is.

When you’re dealing with a condo property that’s considered non-warrantable, however, things can get a little more complicated.

That’s why before you set out to shop for your dream condo property, you need to understand more about the type of condo you’re buying and how that might affect your financing.

Read on to find out more about warrantable and non-warrantable condos and how we can help you finance a non-warrantable property.

What is a Non-Warrantable Condo?

When it comes to condominiums, there are warrantable condos and non-warrantable condos.

Each of the agencies (Fannie, Freddie, FHA, etc) has a list of guidelines that a condominium must meet, and a warrantable condo is, simply put, a condo property that meets these requirements.

On the other hand, non-warrantable condos are units that don’t meet these agency guidelines. There can be many reasons that may cause this. Just some of the characteristics that can cause a condo to be non-warrantable include-

  • The larger condo project is not yet complete.
  • The condo development allows short-term rental units and/or the majority of units in the condo project may be rentals.
  • The condo project’s developer is still in control of the owner’s association.
  • A single person or entity owns more than 10% of all condo units in the building or development.
  • Units in developments where more than 25% of the space is used commercially.
  • The condo project is involved in litigation of any kind.

Non-warrantable condominiums may be challenging to finance, but it’s certainly not impossible. 

You’ll need a lender that specializes in financing for non-warrantable properties — specifically in portfolio loans.

Fortunately, here at Gulf Coast Bank Home Loans, we specialize in both conventional and portfolio loan financing - and we can help you finance your non-warrantable property.

Portfolio Loan Financing for Non-Warrantable Condos

To purchase a non-warrantable condo, you’ll need to be approved for a portfolio loan.  These home loans are customized loans that don’t qualify for conventional financing and that have a specific set of requirements developed  by your lender. Portfolio loans are originated, underwritten, and maintained in your lender’s portfolio instead of being sold to the secondary mortgage market.

At Gulf Coast Bank Home Loans, we offer a comprehensive portfolio loan program at competitive rates that can be used to finance non-warrantable condos in a range of qualifying scenarios.

For complete details on qualifying for a portfolio loan for a non-warrantable condo, to learn more about condo eligibility, and to determine if this type of loan is right for you, please reach out to a Gulf Coast Bank loan officer.

We’re Here For All of Your Financing Needs

At Gulf Coast Bank Home Loans, we’re the bank that cares about you!

We’re to help you find the right real estate financing for your needs - whether it’s a conventional loan for a single-family home or a specialized portfolio loan for a condominium.

Find your loan officer today and let’s get you on the path toward your homeownership dreams.