In 1882, Emma Lazarus wrote this poem for JVM: “Give me your tired, your poor, your non-warrantable condos yearning for financing…”
And everyone loved it because it defined JVM Lending.
And then of course in the following year, Ms. Lazarus wrote sort of a rip-off poem for some statue and a few immigrants or something, but we’ve always liked our poem much better here at JVM.
Long story short: Not all non-warrantable condos are eligible for alternative financing, but if there is a way to finance them – JVM will find it.
FHA Spot Approvals: A Surprising Solution for Non-Warrantable Condos
Quick reminder: A non-warrantable condo is simply a condo with an HOA that does not meet Fannie Mae and Freddie Mac guidelines – and is thus ineligible for Fannie or Freddie financing.
In any case, we have discovered that FHA is (shockingly) often much more flexible than Fannie and Freddie when it comes to approving condominiums for financing.
So, we are successfully garnering “FHA spot approvals” for condos that are ineligible for Fannie and Freddie financing. And again, this is something that truly shocked me, as I was always under the impression that FHA was MORE stringent than Fannie and Freddie.
As another reminder, an FHA spot approval is the approval by FHA for the financing of a single unit within a condo complex that is otherwise not FHA-approved as a whole.
The complexes themselves still need to meet FHA guidelines, so there is never a guarantee that we can get a spot approval, but the application process for a spot approval is not that difficult or time-consuming (for a lender that knows the process), and it is far easier than getting an entire complex approved.
Why FHA Financing Might Be the Best Option for Your Non-Warrantable Condo
We realize that FHA financing, with its upfront MIP (Mortgage Insurance Premium) and monthly MI requirements, is not as favorable as Fannie Mae financing.
But FHA rates are lower than Fannie’s rates and FHA financing is vastly more favorable than other types of financing for non-warrantable condos.
So, once again – if any readers have a non-warrantable condo in need of financing (no matter how tired or poor it is), they should send it our way so we can see if we can find financing for it.
