Warrantable vs Non-Warrantable Condos: What Every Buyer Needs to Know Buying a condominium offers convenience for a lifestyle, but not all condo associations are treated equally by mortgage programs. Lenders “warrant” certain condo projects giving borrowers access to FHA, VA, USDA, and conventional loans while others remain “non- warrantable,” limiting financing options. This guide breaks down the differences and shows you how to secure financing regardless of your project’s status. What Is a Warrantable Condo? A Warrantable condo meets strict lender criteria, making it eligible (“Warrantable”) for a full range of mortgage products. Key Criteria: • Owner-Occupancy: under 50% of units owner-occupied • Reserves: Adequate capital reserves for maintenance & repairs • Insurance: Master policy covering 100 % of common elements • Litigation: No pending lawsuits against the HOA • Commercial Use: under 25% of total square footage used for • commercial purposes Benefits of Warrantable Status: • Access to FHA, VA, USDA, and conventional mortgages • Lower down-payment requirements • Competitive interest rates • Streamlined approval process What Is a Non-Warrantable Condo? A non-warrantable condo fails one or more lender requirements, disqualifying it from certain mortgage programs. Common Reasons: • Excessive investor-owned or rental units • Insufficient reserve funds • Pending litigation involving the association • High commercial use or unconventional ownership structures • Developer or builder control over the HOA Risks for Buyers: • Limited to portfolio or hard-money lenders • Higher down-payment and interest rates • Stricter underwriting guidelines • Potentially longer closing timelines Financing Options for Warrantable Condos • FHA Loans: 3.5 % down; lenient credit guidelines • VA Loans: 0 % down for eligible veterans • USDA Loans: 0 % down in qualifying rural areas • Conventional Loans: 3% to 5 % down; flexible terms • Tip: Ask your loan officer to verify the project’s FHA/VA approval status early in your search. Financing Options for Non-Warrantable Condos • Portfolio Loans: Held on lender’s books; flexible criteria • Hard-Money Loans: Asset-based; higher rates, shorter terms • Bank Statement Loans: Alternative income verification • Wraparound Mortgages: Seller-financed structure How to Convert a Non-Warrantable Condo • Boost Reserves: Increase HOA reserve contributions • Boost Owner-Occupancy: Encourage owner-occupancy over rentals • Resolve Litigations: Close or settle pending lawsuits • Re-Submission: Submit updated documents for FHA/VA • recertification Frequently Asked Questions • Q: Can I get an FHA loan on a condo not on the FHA approved list? A: Not directly. You’ll need a portfolio or hard money option or wait for FHA recertification. • Q: What’s the difference between a project-approval and unit- • approval? A: Project approval covers the entire development; unit • approval is case-by-case, often at higher rates. • Q: How long does condo recertification take? A: Typically, 60–90 • days once complete documentation is submitted. Ready to Finance Your Condo? Whether you’re eyeing a warrantable community or navigating non-warrantable hurdles, 1st Florida Lending has the expertise and programs to make it happen. Are your ready? Call us at (800) 655-1345 or fill out our Request a Quote questionnaire form below to speak with a Condo Financing Specialist.