Cape Coral Condo Mortgages

Condo mortgages come with slightly higher rates than single-family homes

• This is because lenders view condos as slightly riskier investments due to them being run by an HOA association or condo management company
• The lender must review the fiscal and physical health of the development

Some condos are “Warrantable” and some are “Non-Warrantable”

• Typically, a condo is considered “warrantable” if no single entity owns more than 10% of the units in a project, at least 51% of the units are owner-occupied, fewer than 15% of the units are in arrears (behind) with their association dues, the homeowners association (HOA) is not named in any lawsuits, and commercial space accounts for 25 percent or less of the total building square footage.

*as defined by Fannie Mae and Freddie Mac (the two Government Sponsored Enterprises who purchase and sell mortgages on the secondary market)

• A condo or co-op unit is considered “Non-Warrantable” if the project has yet to be completed, its developer has not turned over control of the HOA to the owners, the community allows short-term rentals, a single person or entity owns more than 10% of all unit, or it’s in a project where the majority of units are rented to non-owners.

*A high number of vacancies can also negatively affect the condo’s status

• Common non-warrantable properties include condotels, time shares, fractional ownership properties, and other projects which require owners to join an organization, such as a golf club.
• Manufactured housing projects and other developments which are not legally considered real estate are also excluded from warrantability. These include house boat and motorhome projects.

When buying a condo, ask your real estate agent to inquire about the building’s warrantability before you go any further.