Non-Warrantable Condo Loans

A condo is considered non-warrantable when the condo project or Homeowners Association (HOA) fails to meet the strict eligibility guidelines set by Fannie Mae and Freddie Mac. Common reasons include:

• Less than 10% of the annual HOA budget allocated to reserve funds.
• Pending structural or financial litigation involving the HOA.
• More than 50% of the units occupied by renters or investors.
• A single entity owning more than 10% to 20% of the total units.
• Short-term rental or “condotel” leasing structures.

Traditional banks and credit unions sell their mortgages to secondary market investors who demand strict compliance with conventional Fannie Mae rules. When you apply for a loan, the bank sends an HOA Questionnaire to your property management. If the HOA answers “yes” to litigation or fails reserve requirements, the bank automatically declines the property—regardless of your personal credit score or income strength.

No. This loan is structured as a standalone second mortgage. It sits in second position behind your primary mortgage, allowing you to access cash from your home equity while keeping your low first-mortgage interest rate completely intact.

Yes. Once approved, you receive a full lump-sum payout at closing. You can use these funds to pay off mandatory HOA special assessments, consolidate high-interest debt, fund home renovations, or handle personal capital needs.

Because non-warrantable loans carry unique property risks that traditional agencies won’t touch, interest rates are typically slightly higher than standard conventional loans. However, because it is a second mortgage, you only pay that rate on the money you borrow, preserving your historically low rate on the majority of your debt.

Yes. Traditional banks enforce a zero-tolerance policy for lawsuits. We review the specific nature of the litigation. If the lawsuit involves minor disputes, slip-and-fall claims covered by insurance, or non-structural issues, our in-house underwriting team can clear the property for approval.

Maximum borrowing power depends on your credit score, property type, and occupancy. Generally, borrowers can leverage up to 75% to 80% Combined Loan-to-Value (CLTV) across their first and second mortgages combined.

Yes. We offer flexible income verification options, including Bank Statement Second Mortgages. Instead of relying on tax returns that show artificially low taxable income, we can verify your ability to repay using 12 to 24 months of personal or business bank deposits.

Yes. Developments operating as resort condotels, short-term vacation rentals (Airbnb/VRBO friendly), or projects with commercial/retail space on the ground floor qualify under our non-warrantable condo programs.

To complete your underwriting review, you will typically need:

• Government-issued ID.
• Proof of income (W-2s/paystubs or 12–24 months of bank statements).
• Current mortgage statement for your first lien.
• HOA contact information or completed HOA Questionnaire.
• Proof of condo master insurance policy and personal HO-6 insurance.

Traditional retail banks often drag out condo reviews for 60 to 90 days before issuing a denial. Because we handle our underwriting and condo evaluations in-house, most non-warrantable second mortgages close within 21 to 30 days.