Buying a California Condo
It’s important that you speak with a condo specialist when financing a California condominium. There are many factors that should be considered when determining which condo loan or loans will be eligible for the property that you are interested in purchasing. RTC Mortgage specializes in condominium financing – everything from warrantable and non-warrantable to resort condotel classifications.
The 3 California condo classifications are:
Condominium – warrantable
Condominium – non-warrantable
Condominium – Warrantable
The warrantable condo classification is for condos that meet “Agency” guidelines. The following loan programs are considered “Agency” loans: Fannie Mae, Freddie Mac, and most government loan programs such as FHA, VA, and USDA. There are multiple factors that determine if a condo is financeable with an “Agency” loan. To determine if a condo is warrantable, your RTC Mortgage loan officer will review the condo documents provided by the subject condo’s property manager.
In order for a condo to be classified as “warrantable,” the subject condo property manager will complete the bank’s condo questionnaire: Fannie Mae Form 1076 or Freddie Mac Form 426. See “non-warrantable condo” for potential issues with the Forms 1076 and 426 that will require your condo to be financed with a non-warrantable portfolio condo loan.
Non-warrantable condos are not eligible for the “Agency” loan programs that warrantable condos are approved for. Your RTC Mortgage loan officer will determine which classification your condo falls under. If your condo is classified as non-warrantable, you will be offered one of RTC Mortgage’s portfolio loan programs with a competitive rate.
The following information reported on Form 1076 or 426 will classify a condo as non-warrantable:
One Owner owns more than 20% of the total (if there are 21 or more units in the project)
Pending litigation against the HOA
More than 10% of the owners are delinquent on HOA fees
The condo possesses some hotel-like amenities such as a registration desk, daily rentals, or on-site maid service.
A Condotel is a term used to describe a condo-hotel. A condotel possesses some hotel-like amenities such as a front desk for checking in and out, an activities or concierge desk, and daily or weekly maid service.