This document discusses financing options for condo purchases. It outlines warrantable condos that meet Fannie Mae or FHA guidelines, which typically require lower down payments but have more stringent project requirements. It also describes non-warrantable condo options for buyers with good or bad credit, which have higher down payment and interest rate requirements but fewer project restrictions. Condos present profitable sales opportunities for real estate agents in Florida due to high demand and higher average sales prices.

1. Financing Condos
Lending Tips
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2. Condo Sales Growth
• According to recent
housing statistics from
Florida Realtors,
existing home and
condo sales rose in
2011 by 13% on
existing home sales and
29% on existing condo
sales, compared to the
statistics from 2010.
• Condos offer a huge
opportunity to increase
your overall sales and
business as a Real
Estate Agent.

3. Financing Condos
Condos fall into two categories for financing. Each
have their own guidelines in regards to lending.
Warrantable Non-Warrantable

4. Warrantable Condos
Through Fannie Mae
• Most of the units are Owner-
Occupied.
• For existing condo projects, 90%
must be sold.
• For new construction projects, 70%
must be closed or under contract.
• No more than 15% of the units can
be 30 days behind on HOA dues.
• No more than 10% of the project
can be owned by a single entity.
• HOA must budget at least 10% of
income for replacement reserves.
• HOA cannot be in control of builder.
• This list is not all inclusive.
• Warrantable means Fannie-Mae will
insure the loan.

5. Warrantable Condo Search
• https://www.efanniemae.com/sf/refmaterials/approvedprojec
ts/index.jsp
• Google “Fannie approved condos”.
• At bottom of page is State list , click on State for pdf of
warrantable condos.
• Listing Agent should also know if the Condo is Fannie/FHA
approved.

6. Fannie Mae
Lending Guidelines
• 620 middle credit score.
• At least 25% down payment
required.
• Total debt ratio no greater that
45%, 50% if compensating
factors.
• Factors include 6 months PITI
reserves, higher credit score,
verifiable rent for 12-24 months,
etc.
• HOA condo questionnaire to
determine eligibility hasn’t
changed. $200 - $400 hard cost to
Buyer.
• Approve/Eligible DU/AUS
findings.

7. Warrantable Condos
FHA Approved
• 50% or more of the units are Owner-
Occupied.
• FHA concentration less than 50%.
• For existing condo projects, 50% must be
sold.
• For new construction projects, 50% must be
closed or under contract.
• No more than 15% of the units can be 30
days behind on HOA dues.
• No more than 10% of the project can be
owned by a single entity.
• Cannot be within 1000 feet of a heavily
traveled road, 3000 feet of railroad, one mile
of airport, or five miles of military airport.
• Cannot be in designated wetland or flood
zone.
• HOA cannot be in control of builder.
• This list is not all inclusive.

8. FHA Approved
Condo Search
• https://entp.hud.gov/idapp/html/condlook.cfm
• Google “FHA approved condos”.
• Input State and Zip Code field.
• Listing Agent should also know if the Condo is FHA approved.
• FHA charges $1500.00 to approve a condo project, which is a
hard cost to the Borrower if not currently approved.

9. FHA Condo
Lending Guidelines
• 580 credit score minimum, must meet
exact FHA underwriting guidelines.
• 640+ credit score uses DU/AUS results.
• At least 3.5% down payment required.
• Total debt ratio no greater that 45%,
56.99% if compensating factors and
over 640 credit score.
• Factors include 3 months PITI
reserves, higher credit score,
verifiable rent for 12-24 months, 10%
down etc.
• HOA condo questionnaire to
determine eligibility hasn’t changed.
$200 - $400 hard cost to Buyer.
• Approve/Eligible DU/AUS findings.

10. Non-Warrantable Condos
Break Down Into Two Categories
• Credit score above 620. • Credit score below 620.

11. Good Credit
Non-Warrantable Condo
• 30% minimum down payment
620-679 credit score
• 20% minimum down payment
680+ credit score.
• Minimum purchase price of
$100k.
• Available on 5/1 and 7/1 arms
near conforming rates.
• Maximum debt ratio of 45%
• Condo-Tel minimum down
payment = 30%.
• LTV guidelines apply to Primary,
Second home, and Investment
properties
• Turn time 6-8 weeks for approval.

12. Bad Credit
Non-Warrantable Condo
• Private investor loan through our
network.
• 35-40% down payment required.
• Interest rates typically double
digit, 10% - 15%
• Terms of 3 year and 5 year
balloons.
• Individual investor will have their
specific terms.
• Higher loans costs. Average 3% in
origination, have seen as high as
7%. Investor specific.
• Minimum loan amount of $50k.
• Turn time typically 2 -3 weeks.

13. Profitable Opportunity
• Florida had a very high
condo concentration.
• Condos present unique
lending challenges that
can be overcome
through accurately
qualifying the Buyer.
• Overall average sales
price is higher, leading
to increased
commissions.