FHA Condo Approval Specialist: The Condominium is Non-Warrantable But Can I Do VA Financing?

The Condominium is Non-Warrantable But Can I Do VA Financing?

The Condominium is Non-Warrantable But Can I Do VA Financing?

va condo approval

Last week, I fielded an inquiry from a gentleman asking if non-warrantable condos could be eligible for a VA condo project approval.  He had read one of my blog articles on ActiveRain about financing non-warrantable condos.  He wrote:

“I am hoping you can help me here. Does a condo have to be warrantable in order to be VA approved? It seems like most of the requirements I read for a VA loan are met by some projects that are non-warrantable.”

And my response was…

There are many facets of a condominium that can render it “non-warrantable” to Fannie Mae.  Fannie, Freddie, FHA and the VA all have different standards for acceptable condominiums.  There are many commonalities amongst them but each has its nuances.  Fannie, FHA and the VA do not use each others’ approved condos lists. 

For example, Fannie does not allow one entity to own more than 10% of the units; for FHA, this is 50% and the VA does not have this requirement.  FHA will not allow the investor concentration to exceed the owner-occupancy concentration; Fannie and the VA will allow it if the subject purchase loan is to an owner-occupant and Fannie will allow it for a second home purchase.  Fannie and FHA allow certain leasing restrictions that the VA does not. 

Thus, there really is no way to answer your question without specific details regarding why you think that a condominium project is not warrantable.  I would be happy to answer any specific questions that you may have.

He had a follow up question:

I doubt that I am explaining myself clearly, but maybe just explaining what I am doing will help. You see, I went to look at a condo conversion that is taking deposits as we speak; 20 of 29 units have been reserved. When I asked about the units' ability to be financed, they told me that they were unfamiliar with VA terms, but that their development was non-warrantable.

 From what you are telling me, it seems as though the development is likely not FHA or Fannie warrantable, but they just don't know about the VA path.   Does this seem right?”

fha condo approval…And my response…

“Non-warrantable” means that ordinary financing options are not available but I believe is technically in reference to conventional financing (Fannie Mae and Freddie Mac).

You could find out why he is claiming that the project is non-warrantable.  My guess is that the developer believes that it doesn’t meet the owner-occupancy requirements for typical financing options, including VA.  The only requirement to be met is that 70% of the units must be sold or under contract to someone other than the developer.

For the project to become eligible for FHA approval, half of the units in the conversion must convey to owner-occupants or be under contract for purchase by an owner-occupant; there is no pre-sale requirement for conversions.  For VA, 70% of the units must be conveyed for condominium conversions.  The developer owns 9 of the 29 units, which would render it non-warrantable.  The VA may approve this condominium with the contingency that one more unit conveys to someone other than the developer..

Brent might have a chance at this if the developer is willing to get the project VA-approved.

Top image courtesy of Stuart Miles/freedigitalphotos.net

The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.


ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.


Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at askeric@readysetloan.com or call me at 404-433-4565. I will be happy to answer any of your questions.


FHA/VA Condo Approval Specialist

404-433-4565 Cell Phone

860-644-3772 Fax Phone

ready set loan condo team


 CAI-CT logo

 Check out our article in Common Interest magazine on page 19!

Find Eric Boucher with ReadySetLoan Condo Team on Google+

Comment balloon 22 commentsReadySetLoan Condo Approval Team • June 16 2014 02:40AM


Good morning Eric. Probably not going to be able to do a VA loan, but most likely and do a conventional loan with 5% down and will end up paying MI. This is a perfect reason for an association to get their complexes approved.

Make it a great week.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) about 6 years ago

Eric, Condos have so many different considerations. It is important for the consumer to have a knowledgeable agent guiding them through the process of buying and selling.

Eric, is a person who works for the consumer and finds answers.

Posted by John Wiley, Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA about 6 years ago

Eric, That makes perfect sense to me and by the owners saying it is not warrantable they do not intend to be bound by any of the requierments or limitations about ownership restrictions.

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) about 6 years ago

I wonder why most real estate agents do not even know what you are talking about here. It would save them a lot of headaches later.

Posted by Michael Frank (American United Mortgage Corp.) about 6 years ago

Eric since this is a conversion, it is understandable the developer will own most of the units until most are sold. Good explanation answering his question.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA about 6 years ago

Hi Joe - Fannie might allow it if it meets the rest of the approval criteria

Thank you John.  I try to stay abreast on all things condo.

I think that it the case, Debbie.  It doesn't sound like they are having a tough time collecting reservations for purchase contracts

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) about 6 years ago

It would save a lot of aggravation later, Michael Frank.

Thank you Michael.  It would be easier to get an FHA approval since 50% of the units are allowed to be owned by a single entity.  I believe that FHA bumped it from 10% to 50% specifically for this type of scenario


Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) about 6 years ago

Perfect example why I go to the expert for these types of answer!  Thank again for the great post  always informative.

Posted by Chuck Mixon, Cutler Bay Specialist, GRI, CDPE, BPOR (The Keyes Company) about 6 years ago

Eric, If I read your remarks correctly,  VA is only available for re-sales if the owner/developer can only own 10% of the units.

Bill Roberts

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) about 6 years ago

Much language needs to be clarified. For example, why is a second residence automatically deemed an "investment" residence? Many second homes are used by the owners themselves.

Posted by Olga Simoncelli, CONSULTANT, Real Estate Services & Risk Management (Veritas Prime, LLC dba Veritas Prime Real Estate) about 6 years ago

Thank you Chuck

Bill - I made a mistake.  A VA approval will be available when the 70% of the units are sold.  The 10% single entity requirement was incorrect.  Thank you for questioning it.

Hi Olga - a second home is not typically considered as an investment unless the unit owner rents the unit when he/she is away.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) about 6 years ago

Great article and vert timely for me as I just secured private financing for a co-op complex that the management owns more than 50% of the units.  Our plan is to finance the management owned unit sales to reach the 49% threshold.


Posted by Robert Sendel (Coach Real Estate Associates) about 6 years ago

Great post, buyers are not often informed on the paths they can take to get into a condo, this is a good way of explaining it.

I recently did a loan for a couple that could only really do FNMA or FHA though the condo was unwarrantable for either loan type.  Thankfully, they were able to put 20% down on a Conventional loan which qualified them for limited review.  This limited review is only available with a handful of lenders and allows the condo to be financed without a condo questionnaire.  Everything turned out well and I even got calls from a few other buyers looking to get into that complex.

It's not the end of the world when a condominium is unwarrantable, that much is obvious with your post, thanks Eric!

Posted by Rachel Khoury, Your Wingwoman for Colorado Mortgages (Tailwinds Mortgage) about 6 years ago

There is a lot of great information in this post, Eric.  And, I bookmarked it to send to a realtor associate of mine.  Thanks!

Posted by Marshall Enterprises, Antiques, Lawn Care, and Trashouts (Marshall Enterprises ) about 6 years ago

Eric, I sure hope this gentleman continued to work with you so that he could get into a condo he desired. Good stuff as always.

Posted by Teral McDowell (Referral Patners LLC) about 6 years ago

Eric excellent blog on this issue, and it goes to show there is no set answer, each loan program have their own little twists.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 6 years ago

I wish that ther was just one standard - it can get so confusing.. and there are a lot of other requirements as well for each program... especially FHA.  Uggg.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) about 6 years ago

Eric:  I agree with George above ... your post proves just how hard it is to provide set answers.  Ever answer seems to have an asterik attached to it.  The big "plus" of this question is that is was asked.  Kudos to this guy for being wise enough to do some answer seeking .. and your sharing that answer with us too ...


Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) about 6 years ago

I'm guessing the developer would not go through the trouble of getting the condo project VA-approved.  

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) about 6 years ago

Regardless, I still feel like people should be consulting accountants more than they do even in this case.



Love and light,


Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) about 6 years ago

Hi Robert - I will message you regarding the Co-op private money lender.  I run into co-ops very rarely and this information would be great for me to have!

Hi Rachel thank goodness for limited project reviews!

Thank you Marshall Enterprises.  I'm pleased that you found value in it!

Thank you Teral.  I hope I can help him

They absolutely do, George and lenders have their own overlays which makes it even trickier

That would certainly be nice, Joan.  I do know that the VA is looking to modify their condo approval process to be more like FHA's but this may take years.

Thank you Gene.  And it gave me an article to write!

Pamela I guess it will depend on whether he feels that the need is there

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) about 6 years ago

Condos can be (as we Realtors know) very difficult to get financing for, and many times they are priced well, and therfore very attractive to buyers who may have some specific financing terms. 

Posted by Carol Zingone, Global Realtor in Jax Beach, FL - ABR, CRS, CIPS (Berkshire Hathaway Home Services Florida Network Realty) about 6 years ago