Non-Warrantable Condo Loan
Picture this: You’ve spent weeks searching, and finally found your dream condo. You put in an offer, it gets accepted, and you’re well on your way to blissful ownership. Then out of the blue, you get a call from your lender, saying something about your condo is “non-warrantable” so they can’t do the loan. What does that even mean?
A Non-Warrantable Condo means there are one or more characteristics to the condo project which cause it to be non-compliant to standard lending guidelines. Because of these characteristics, your standard lender typically would have to send you away because they couldn’t finance a loan on that condo.
Why would a condo be considered non-warrantable?
There are several reasons. Here are a few.
- The condo project has mandatory dues or membership fees for clubhouses or recreational facilities.
- There are non-incidental business operations owned/operated by the HOA, such as a restaurant, spa, or health club.
- The project is in litigation—either the HOA, project sponsor or developer are party to pending litigation.
- Over 40% of the total above and below grade square footage of the project building is commercial, non-residential, or mixed-use space.
- A single entity (individual, investor group, partnership, or corporation) owns up to 40% of the total units in the project.
Let’s go back to your scenario above. What are you supposed to do? If your lender is Pacific Residential Mortgage, you continue with your transaction uninterrupted, because we can finance non-warrantable condos! At PRM, as a part of our Alternate Advantage Program, we have a loan specifically dedicated to this type of condo. We can finance condos that have up to two of the above-listed characteristics.
ADDITIONAL PROGRAM DETAILS*
- Fixed and adjustable rates available
- Interest only option available
- Up to 90% Loan-to-value
- Loan amounts up to $2 million
- Full Doc, Bank Statement, Foreign National, and Asset Resource programs are eligible in combination with this program.
- Purchase or refinance
- Owner-Occupied, Second Home, and investment properties
Do you have questions about the Non-Warrantable Condo loan or any other home loan questions?
Contact us today!