Non-Warrantable Condo Loans

Name the issue before choosing the loan

Examples that can trigger additional review include ownership concentration, commercial space, project litigation or hotel-like operation. These issues differ in severity and cannot be treated as one universal exception.

Obtain the project findings, questionnaire and supporting documents. An explanation of why conventional financing was declined is more useful than the label non-warrantable by itself.

Review the project and borrower together

An alternative-documentation loan changes the method used to verify borrower income. It does not automatically waive project insurance, property condition or legal review. For an investment condo, DSCR also requires acceptable rental documentation.

The final LTV is the lowest applicable limit for the program, property, borrower and transaction. There is no single non-warrantable condo down payment that applies to every project.

Treat condo hotels as their own category

A hotel-style condo should be evaluated under condo-hotel requirements. Onsite management, transient use or rental-pool arrangements can affect the program even when the unit has a kitchen and looks residential.

Ask the lending team to confirm whether the project is an ordinary condominium, a non-warrantable condominium or a condo hotel before ordering a complete file.

Build a useful project package

Start with documents that explain the project’s finances, insurance and operating risks.

• Current condo questionnaire and master insurance.
• Association budget, reserves and special assessments.
• Details of litigation, structural work or deferred maintenance.
• Ownership, commercial-use and rental-management information.