In basic terms, a warrantable condo is a condo which belongs to a lower risk condo community. These units must meet specific guidelines to be approved as  warrantable, and are eligible for financing through the VA, FHA, or Fannie Mae, based upon which organization has deemed the property warrantable. If a property is not warrantable, then there are still financing options available, but the guidelines become much stricter, as the property is in a high risk condo community.

Some builders seek approval prior to breaking ground. By doing this, they make the property warrantable before it is even formed. To do this, there are specific requirements for presales, construction time, and total size, but with these communities there is never a fear about getting financing. If a builder did not seek approval prior to building, then the community must meet guidelines to be added to a list of warrantable properties. These are the current approved lists for FHA, Fannie Mae, and VA.

If the condo you would like to buy is not on one of those lists, you need to first see if it can be added. To do this, you need to submit a questionnaire to the treasurer of the Home Owner’s Association. This questionnaire will request information on the current status of the HOA’s finances, including how much they have in reserves and if they have any outstanding debts. It will also request information on the number of owners in arrears on home owner’s dues and the number of units which are being rented by the home owners. Finally, a review will be made of the original building plan. If less than 50% of the community has been completed, the application will likely be denied, even if the community was originally drawn up with, say, four phases and only one will ever be built. So, many “complete” communities are technically incomplete, which adds another wrinkle into this situation.

But fear not, there are still options for financing even if a condo community is not warrantable. If you have any questions on financing a condo, or if you would like some help in getting into your new home, please contact me. And if you have anything to share about condo purchasing, please leave a comment.