Warrantable vs. Non-Warrantable Condos
The distinction between "warrantable" and "non-warrantable" condos is significant in real estate, especially regarding financing.
Warrantable Condos:
Financing: These condos meet specific requirements set by government-sponsored entities like Fannie Mae or Freddie Mac. As a result, they are eligible for conventional mortgage loans.
Characteristics: These typically include most owner-occupied units, a stable homeowners' association (HOA), no single entity owning a large portion of the units, and limited commercial space within the complex.
Advantages: Easier to finance due to standard mortgage options. Lower interest rates and down payments are often available.
Buyer Appeal: More appealing to a broader range of buyers due to the ease of securing financing.
Non-Warrantable Condos:
Financing: These do not meet the criteria set by Fannie Mae or Freddie Mac. Financing is usually more challenging and might require non-conventional loans.
Characteristics: This could include a higher number of rental units, a more significant commercial presence, new developments, or a single entity owning a significant percentage of units.
Challenges: Higher interest rates and down payments are expected. Loan options are more limited, often requiring a portfolio lender or a jumbo loan.
Investor Interest: Sometimes more attractive to investors or cash buyers who are less reliant on traditional financing methods.
In summary, warrantable condos offer the ease of conventional financing and appeal to a broader range of buyers. In contrast, non-warrantable condos often cater to investors or those with alternative financing sources due to their more complex loan requirements.
