WARRANTABLE VS NON-WARRANTABLE CONDOS
Warrantable vs Non-Warrantable Condos: What Every Buyer
Needs to Know
Buying a condominium offers convenience for a lifestyle, but not all condo associations are
treated equally by mortgage programs. Lenders “warrant” certain condo projects giving
borrowers access to FHA, VA, USDA, and conventional loans while others remain “non-
warrantable,” limiting financing options. This guide breaks down the differences and shows
you how to secure financing regardless of your project’s status.
What Is a Warrantable Condo?
A Warrantable condo meets strict lender criteria, making it eligible (“Warrantable”) for a full
range of mortgage products.
Key Criteria:
•
Owner-Occupancy: under 50% of units owner-occupied
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Reserves: Adequate capital reserves for maintenance & repairs
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Insurance: Master policy covering 100 % of common elements
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Litigation: No pending lawsuits against the HOA
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Commercial Use: under 25% of total square footage used for
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commercial purposes
Benefits of Warrantable Status:
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Access to FHA, VA, USDA, and conventional mortgages
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Lower down-payment requirements
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Competitive interest rates
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Streamlined approval process
What Is a Non-Warrantable Condo?
A non-warrantable condo fails one or more lender requirements,
disqualifying it from certain mortgage programs.
Common Reasons:
•
Excessive investor-owned or rental units
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Insufficient reserve funds
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Pending litigation involving the association
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High commercial use or unconventional ownership structures
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Developer or builder control over the HOA
Risks for Buyers:
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Limited to portfolio or hard-money lenders
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Higher down-payment and interest rates
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Stricter underwriting guidelines
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Potentially longer closing timelines
Financing Options for Warrantable Condos
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FHA Loans: 3.5 % down; lenient credit guidelines
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VA Loans: 0 % down for eligible veterans
•
USDA Loans: 0 % down in qualifying rural areas
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Conventional Loans: 3% to 5 % down; flexible terms
•
Tip: Ask your loan officer to verify the project’s FHA/VA approval status early in your
search.
Financing Options for Non-Warrantable Condos
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Portfolio Loans: Held on lender’s books; flexible criteria
•
Hard-Money Loans: Asset-based; higher rates, shorter terms
•
Bank Statement Loans: Alternative income verification
•
Wraparound Mortgages: Seller-financed structure
How to Convert a Non-Warrantable Condo
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Boost Reserves: Increase HOA reserve contributions
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Boost Owner-Occupancy: Encourage owner-occupancy over rentals
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Resolve Litigations: Close or settle pending lawsuits
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Re-Submission: Submit updated documents for FHA/VA
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recertification
Frequently Asked Questions
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Q: Can I get an FHA loan on a condo not on the FHA approved list? A: Not directly. You’ll
need a portfolio or hard money option or wait for FHA recertification.
•
Q: What’s the difference between a project-approval and unit-
•
approval? A: Project approval covers the entire development; unit
•
approval is case-by-case, often at higher rates.
•
Q: How long does condo recertification take? A: Typically, 60–90
•
days once complete documentation is submitted.
Ready to Finance Your Condo?
Whether you’re eyeing a warrantable community or navigating non-warrantable hurdles, 1st
Florida Lending has the expertise and programs to make it happen.
Are your ready? Call us at (800) 655-1345 or fill out our Request a Quote
questionnaire form below to speak with a Condo Financing Specialist.