The FHA and VA maintain lists of approved communities, but don’t despair of the unit you want isn’t in a development on those lists. are loans guaranteed by the Department of Veterans Affairs.īoth loan types are known for their more flexible lending guidelines than conforming mortgage financing. FHA loans are insured by the Federal Housing Administration. VA and FHA home loans are government-backed mortgages. Verify your condo buying eligibility FHA and VA mortgage rules for condos Warrantable condos create lower risk for the bank. When buying a condo, ask your real estate agent or lender about the building’s warrantability before you go any further.Ī warrantable condo typically gets you lower mortgage rates than a non-warrantable condo. These include houseboat and motorhome projects.Ī condo in monetary litigation will likely be disqualified from financing by the major agencies. Manufactured housing projects and other developments which are not legally considered real estate are also excluded from warrantability. Non-warrantable features for conventional loansĬommon non-warrantable properties include condotels, timeshares, fractional ownership properties, multi-unit condos (the condo unit itself is two units), condos in a permanent care/assistance residence, and other projects which require owners to join an organization, such as a golf club. 21 units or more: A single entity can own up to 25% of the units in the project.5-20 unit project: A single entity can own 2 units.2-4 unit project: A single entity can own 1 unit.So, it total, Freddie Mac’s single entity ownership limits are as follows: Fannie Mae waives a project review for 2-4 unit condo projects, thereby giving no restriction to how many units a single entity can own.įreddie Mac, however, says a single entity can only own one unit in a 2-4 unit project. In our research, there are no material differences between Freddie Mac and Fannie Mae guidelines, except for one. Commercial space accounts for 35% or less of the total building square footage.The homeowners association (HOA) is not named in any lawsuits.Fewer than 15% of the units are 60 days or more in arrears with their association dues.For owner-occupied transactions, there is no owner occupancy requirement.For investment properties, at least 50% of the units are owner-occupied or second homes. ![]() The unit is a detached condo (shares no walls with other units but is legally classified as a condo).The project consists of just 2-4 units (project review is waived in this case, and, apparently, there is no restriction on how many units a single entity can own, but check with your lender to confirm). ![]() No single entity owns more than the following number of units in the project.Typically, a condo is considered warrantable if: Non-warrantable condos are more challenging to finance.įollowing are rules for condo warrantability: Fannie Mae condo warrantability ![]() Ĭondo projects and properties which don't meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable. This means that their loan purchased by one of two government-sponsored entities - Fannie Mae or Freddie Mac - and that the loan meets the two group’s minimum standards.įannie Mae and Freddie Mac use the term “warrantable” to describe condominium projects and properties against which they’ll allow. The majority of home buyers use “conforming” mortgage financing. Įxpect condominium and housing cooperative financing opportunities to remain high this year. It must also verify the fiscal and physical health of the entire development into which you’re buying.įortunately, with the housing market doing well and condo values climbing, mortgage lenders allow looser guidelines - even. With condos and co-ops, it’s not just your creditworthiness the lender has to worry about. A mortgage lender who’s looking out for your best interest can help you beat the system. The most experienced and professional mortgage lenders can help you navigate the condo financing maze. They may sometimes increase your interest rate. ![]() Lenders impose a different set of rules on you when you buy a condo. J7 min read More mortgages for condo/co-op ownersīuying a condo is a lot like purchasing a “regular” home, but with one big difference - mortgages are tougher to come by.
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