Non Warrantable Condo Loans | The Mortgage Outlet

The Mortgage Outlet's Non Warrantable Condo Loans offers an alternative to conventional HOA underwriting guidelines.

This Program helps buyers, investors, and homeowners purchase or refinance condos that may not qualify under traditional Fannie Mae and Freddie Mac condominium financing requirements.

About This Program

The Mortgage Outlet’s Non-Warrantable Condo Loan Program provides financing solutions for condominium projects that fall outside standard conventional lending guidelines established by Fannie Mae and Freddie Mac. These programs help buyers, investors, and homeowners purchase or refinance condos that may not qualify for traditional financing due to factors such as litigation, investor concentration, commercial space, HOA issues, or other project-related concerns. Financing may be available for primary residences, second homes, and investment properties depending on the overall project and borrower profile.

The condominium project is permitted to have no more than 2 non warrantable guidelines from the following list:

Provide proof that insurance requirements for property, liability, fidelity, and flood (if applicable) are met. See the Condo Insurance page for requirements.
- Master policies allow:
  - Actual cash value on roofs only.
  - Deductibles up to 10% of coverage amount or $50,000, whichever is greater.
  - Building Ordinance and Law coverage is not required.
No more than 25% of the total units in a project may be 60 days or more past due on HOA dues. Special assessment delinquencies are calculated separately.
No more than 15% of the total units in a project may be 60 days or more past due on special assessment dues.
In projects of 21 or more total units, no more than 30% of the total units can be owned by a single entity.
In projects of 5–20 total units, no more than 2 units can be owned by a single entity.
Commercial space cannot exceed 49% of the total project.
Mandatory membership fees and recreational leases are acceptable, including mandatory fees paid to a master association that is also a resort community.
- Mandatory membership fees are allowed when the subject HOA is a sub-association of a resort community. Fees cannot allow access to resort amenities.
Boat slips do not need to be owned in common and can be deeded separately.
Projects involved in litigation are acceptable as long as the pending lawsuits:
- Are not structural in nature.
- Do not affect the marketability of the units.
Potential damages cannot exceed 25% of the HOA’s reserves unless documentation from the insurance carrier and HOA attorney confirms that:
- The insurance carrier has agreed to provide the defense.
- The HOA’s insurance coverage is sufficient to cover the litigation.

The following documents are required on all reviews:

Budget
Condo Questionnaire
Evidence of Insurance
Inspection Reports
- If a structural and/or mechanical inspection was completed within 3 years of the project review date, obtain and review the inspection report.
- The inspection report cannot indicate any of the following:
  - Critical repairs are needed.
  - If the inspection report indicates there are unaddressed critical repairs, the repairs must have funds allocated and contracted for.
  - No evacuation orders are in effect.
  - No regulatory actions are required.
Additional documentation may be deemed necessary by the condo project underwriter.

You've got questions, We've Got answers

What is the difference between warrantable and non-warrantable condos?

Warrantable condos meet standard agency lending guidelines established by Fannie Mae and Freddie Mac. Non-warrantable condos do not meet one or more of those requirements and typically require specialized financing.

Are interest rates higher for non-warrantable condo loans?

Rates are often slightly higher than standard conventional condo financing because non-warrantable projects are considered higher risk. However, loan terms vary based on the project, borrower profile, occupancy type, and down payment.

How Long Does It Take To Close?