Yikes, that title sounds a little scary, doesn’t it? It doesn’t have to be! You head down to Florida on vacation and stay in a fantastic great vacation rental. It’s amazing because it’s Florida! After a day or two you get to thinking, “Hey, we should buy one of these!” I mean mortgage rates are still historically low and you have good credit. You look around and find a bunch of available listings and even an open house down the street. You pop by and the excitement grows. Maybe you get a Realtor right then and there, maybe it’s something that is still in the back of your mind. You know you want to buy a vacation home or a condo there at the beach!

And then you hear those magic words for the first time: Non-Warrantable Condo. What does that even mean? Short answer is “it does not meet conventional guidelines and will not be bought by government-backed entities like Fannie Mae and Freddie Mac”. Basically, most vacation home/rental type condos are considered non-warrantable. This is as opposed to regular residential condos that you live in which are typically considered warrantable and can be bought and sold much like a typical single-family residence.

Here are some of the factors that that generally make a condo non-warrantable:

- Over 50% of the units are not owner-occupied.

- The complex allows short-term rentals.

- The project is not yet completed.

- A single person owns more than 10% of the total units.

- The complex / HOA is under current litigation.