Condos appeal to many people looking to purchase property that requires less maintenance and allows you to gain access to attractive amenities. The mortgage process and lending requirements vary slightly from a mortgage to a traditional single-family home. Headquartered in NYC for over 29 years, GuardHill specializes in the condo mortgage market.
What is a condo?
A condo is a private residence or unit owned by an individual within a larger building or complex. A condo building typically has shared common areas like garages, recreational rooms, gyms, and outdoor spaces.
What are Condo Fees?
Condo owners pay condo fees, also referred to as common charges, to cover the cost associated with maintaining the common areas in the complex. Typically, the fees are mandated by the Homeowners Association (HOA) and are due monthly.
Warrantable vs. Non-Warrantable Condo Mortgage Qualifications
The mortgage company will review and approve the condo building to determine if it is warrantable or non-warrantable, which will help decide what loan program you may qualify for.
Warrantable condos meet the Fannie Mae and Freddie Mac guidelines, whereas non-warrantable condos fall outside the traditional lending guidelines and are more challenging to finance.
Condo Building Requirements
The following are factors a lender reviews to determine whether a building is warrantable or non-warrantable.
- Condo Occupancy Rate
- Warrantable condo: Typically, a lender will require that at least 50% of the condo units are sold to owner-occupants before lending in the building. An owner-occupant is a resident that holds the title to that property.
- Non-warrantable condo: If the owner-occupancy rate is less than 50%, the building is typically considered non-warrantable
- Litigation History
- Warrantable condo: The lender must ensure there is no current litigation. Some lenders may require a history of previous litigation and the outcome.
- Non-warrantable condo: If the building has any current or pending litigation, a lender will deem it non-warrantable.
- Building Reserves & Building Financials
- Warrantable condo: The lender needs to make sure the building’s financials are sound. Typically, the building is required to allocate at least 10% of the building budget to reserves.
- If the building had recent financial troubles or filed for bankruptcy, it may be difficult for the mortgage company to approve the building.
- Commercial Usage
- Warrantable condo: Commercial space (retail shops, restaurants, grocery stores, etc.) should not exceed 25% of the project’s square footage.
- Non-warrantable condo: If commercial space exceeds 25% of the project’s overall square footage, the building will be considered non-warrantable.
- Building Insurance
- The condo must have adequate and appropriate building insurance for both a warrantable and non-warrantable condo loan.
FHA Condo Loans
Certain condominium buildings are approved by the U.S. Department of Housing and Urban Development (HUD) for FHA loans. Click here to review the approved buildings on the HUD’s website. As an Eagle FHA mortgage company, GuardHill is approved to lend in all FHA-approved condo buildings. Contact us to learn more about our FHA condo loan programs.
New Condo Development Financing
A new condo development may either be a condo project currently being built or recently developed and has not been approved by many lenders. GuardHill lends in virtually every building in the Metro NYC area and understands how to navigate the new condo development financing process to ensure fast closing. We will work closely with the building’s sales team, sponsor, and developer to ensure timely approvals and closings.
Why Choose GuardHill?
GuardHill has over 29 years of mortgage financing experience and specializes in providing standard and out-of-the-box financing solutions for our customers. GuardHill works with numerous investors and lenders and offers various loan programs to provide borrowers with the best financing solutions possible.