What to Know About Condo Mortgages & Non-Warrantable Condo Loans
Condo mortgages are loans for the purchase of condominium units. Condo mortgages have different guidelines than traditional single-family home loans. GuardHill is one of the best condo mortgage lenders that has specialized in condo financing and new condo development financing since 1992.
What is a Condominium Unit?
A condominium unit is a singular unit within a building or community that is owned by an individual. A condo building typically has shared common areas like garages, rec rooms, gyms, outdoor spaces, etc. These common areas are maintained by the condominium association and are paid for by the residents through dues, sometimes referred to as common charges.
Requirements for Condo Financing
When applying for condo financing, the lender must approve the borrower and the condo building. Some things a lender looks for in a condo building, especially in Manhattan condos, are:
- High owner occupancy rates
- The lender typically requires that at least 50% of the units to be sold to owner-occupants before lending in the building.
- No current litigation
- Some lenders may require a history of previous litigation and the outcome
- Sufficient reserves
- The lender typically requires that at least 10% of the building budget is devoted to reserves
- Little commercial usage
- Commercial space in the building should not exceed 25% of the square footage of the project
- Strong financials
- Adequate and appropriate building insurance
The lender has to contact the managing agent of the building in order to access the necessary information. The borrower and realtor can get the managing agent’s information from the seller’s agent or by contacting the building directly. Managing agents typically charge a fee for providing the information needed and that range from $50 to $300.
While we are approving the building, we will also be approving you. This part of the process is the same regardless of whether a condo is involved or not. When you apply for a condo mortgage, GuardHill will need updated budgets, financials, and questionnaires from the condo for every transaction. This helps document any updates or changes from previous documentation on prior loans.
FHA Condo Mortgages
As an Eagle FHA lender, GuardHill is approved to lend in all FHA approved condos.
Non-Warrantable Condo Loan
A non-warrantable condo is a building that does not fit into Fannie Mae and Freddie Mac’s guidelines. If you are purchasing a unit within a non-warrantable condo, then a non-warrantable condo loan may be right for you. Non-warrantable condos fall outside of the traditional lending guidelines, and may be more difficult to finance through a traditional lender who stays away from mortgages that fall outside of Fannie Mae’s guidelines.
At GuardHill, we lend in non-warrantable condo buildings, offering you flexibility when searching for a new home or investment property.
What are the guidelines for a non-warrantable condo loan?
- A low owner occupancy rate
- Non-owner occupants in the building exceed 50%
- High investor concentration
- Investor concentration in the building exceeds 50%
- A high commercial-to-residential ratio
- Commercial space exceeds 25% of the square footage of the project
- Pending lawsuits
Why Work with GuardHill for Condo Financing?
Headquartered in New York City, GuardHill has extensive experience in condo financing for purchases and refinances. GuardHill has been an expert in condo financing, especially the manhattan condo market, since 1992. Due to our high lending volume, we have built trust with many contacts in the condo industry. This allows us to acquire faster approval times for our clients.
Working with GuardHill on your condo mortgage (warrantable and non-warrantable) gives you access to a network of lenders with expansive mortgage lending capabilities. Our team can match your lending needs and desired condo building with the most favorable mortgage terms, all with one application.