In the world of mortgage lending, “Non-warrantable” condominium means is that any mortgage tied to it cannot be sold to Fannie Mae or Freddie Mac. So, if you want to purchase a non-warrantable condo, you’re going to need an unconventional lender or unconventional loan program; Non-Agency, Non-Agency Jumbo, Non-Prime or Non-QM. Reasons can include:
Conventional lenders will not approve a loan with a Loan-to-Value (LTV) greater than 75%
Less than 50% of the units are owner-occupied
Greater than 85% ownership within the condo project must be current on monthly dues
Amenities in development must be complete if project is greater than 12 months old
10+% of the units cannot be owned by a single person or business legal entity. Some conventional lenders have over-lays on their already strict guidelines that require a higher percentage
Unconventional lenders have non-warrantable loan programs with guidelines that are far more sensible and therefore able to offer a diverse variety of loan programs.