You find the perfect Sarasota condo, then your lender says the project is “non‑warrantable.” It can feel confusing and frustrating, especially when you are ready to move forward. You are not alone, and you still have options. In this guide, you will learn what non‑warrantable means, how financing works in Sarasota, what lenders will ask for, and the exact steps to take whether you are buying or selling. Let’s dive in.
What non‑warrantable means
A non‑warrantable condo is a condominium project that does not meet eligibility guidelines used by major mortgage programs like Fannie Mae, Freddie Mac, FHA, or VA. When a project is non‑warrantable, many standard loans are off the table. You will likely need a portfolio or specialty loan, or you may choose cash.
Why it matters to you:
- Smaller lender pool. Fewer lenders finance these condos, so shopping options matters.
- Changed loan terms. Expect higher down payments, potentially higher rates, and tighter underwriting.
- Resale impact. A smaller buyer pool later can affect price and time on market.
- More scrutiny. Lenders will dig into HOA documents, insurance, reserves, and litigation.
Common reasons condos are non‑warrantable
Non‑warrantable status can stem from one or more project issues. Common factors include:
- High investor or rental concentration within the project
- A single owner, developer, or entity owning many units
- A large share of commercial space compared to residential
- Incomplete construction, conversions, or multi‑phase projects without final approvals
- Pending or unresolved litigation involving the association
- Weak association financials, including low reserves or lack of reserve study
- High delinquency in HOA dues
- Use restrictions such as extensive short‑term rentals that conflict with agency rules
- Local code or structural issues, a growing focus since 2021 building safety reforms
Your financing options in Sarasota
Even if a project is non‑warrantable, you have several paths to explore. Terms vary by lender and by your profile, so compare offers carefully.
Portfolio loans
Local banks, credit unions, and community lenders sometimes keep loans on their own books. They may evaluate Sarasota projects case by case and can be more flexible on certain project characteristics. You should expect higher down payments, tighter credit standards, and sometimes higher rates. The benefit is local knowledge and an underwriting team familiar with Sarasota’s condo landscape.
Specialty condo lenders
Some mortgage companies focus on condo financing, including non‑warrantable units. Programs are tailored, and pricing varies with project risk and borrower strength. You can often find solutions when agency loans will not work, but you pay more for that flexibility.
Jumbo loans
If your loan amount is above conforming limits, a jumbo loan may be possible even when agency loans are not. Each lender sets its own condo criteria. You will still face careful project reviews and stronger borrower requirements.
FHA or VA loans
FHA and VA loans only apply if the specific condo project appears on their approved lists. Many non‑warrantable projects are not approved, but there are exceptions. If you are eligible, confirm whether the project is FHA or VA approved before you move ahead with that route.
Cash or private financing
Cash is the simplest answer because it sidesteps lender project reviews. Some buyers also use short‑term private money or bridge funding when speed matters or when a project needs time to resolve issues.
Alternatives to bridge the gap
If you plan to finance later, some buyers use a bridge loan, a HELOC, or a mortgage on another property to cover the purchase or down payment in the short term. Be sure you understand repayment terms and exit timelines.
What lenders will review
Financing a non‑warrantable condo is detailed. Lenders take a deeper look at both the project and your personal profile.
Association documents and project health
Lenders often request:
- HOA governing documents, CC&Rs, bylaws, and rules
- Current budget, year‑to‑date financials, and any CPA review or audit
- Reserve study and evidence of reserve funding
- Master insurance policy declarations and fidelity bond details
- Minutes from recent board meetings
- Details on any special assessments and payment schedules
- Records on pending litigation or insurance claims
- Owner occupancy and rental schedules
- Delinquency reports on HOA dues
- Project completion documents and certificates of occupancy for newer or converted projects
How underwriting differs
- More manual review. Expect a case‑by‑case evaluation rather than automated eligibility.
- Higher sensitivity to risk. Association finances, insurance depth, and litigation carry significant weight.
- Extra conditions. Lenders may require escrowed HOA dues, limits on cash‑out, or seasoning around special assessments.
What it means for your loan terms
- Down payment. Many lenders want higher equity. It is common to see 15 to 25 percent or more.
- Interest rate. Rates are typically higher than comparable agency loans.
- DTI and reserves. You may need stronger liquid reserves and tighter debt‑to‑income ratios.
- Mortgage insurance. MI may not be available or may be structured differently.
Sarasota and Florida factors
Florida condominium law, insurance conditions, and building safety rules shape how lenders approach projects in Sarasota.
- Florida law. Condominiums operate under Chapter 718 of the Florida Statutes. Associations must maintain budgets, reserves, insurance, and records that lenders often review.
- Post‑2021 safety reforms. After the Surfside collapse, state and local rules increased structural inspection and maintenance requirements for many buildings, especially older or coastal high‑rises. These updates raise scrutiny around engineering reports and capital planning.
- Insurance pressures. Many Florida associations face rising premiums and tighter coverage availability. A weak master policy or high deductibles can trigger lender concerns or tougher borrower terms.
- Local building mix. Sarasota has a range of older and newer buildings, including coastal and downtown high‑rises. Older properties may have inspections, repairs, or capital projects underway that affect approval.
- Short‑term rentals. Sarasota’s strong seasonal and vacation demand can increase investor or rental shares in some projects. High rental concentration can push a project into non‑warrantable territory.
If you are considering a specific building, confirm current inspection, reserve, and insurance details with the association and your lender before you write an offer.
Steps if you are buying
Use this plan to reduce surprises and keep your timeline on track.
- Get prequalified early. Talk with lenders experienced in non‑warrantable condos and Sarasota portfolio programs.
- Request the HOA package upfront. Ask the seller or property manager for the full document set listed in the checklist below.
- Compare multiple offers. Pricing and policies vary widely among portfolio and specialty lenders.
- Prepare a larger down payment. Strong liquid reserves can also make a difference.
- Verify the master insurance. Confirm coverage levels and deductibles align with lender expectations.
- Ask about risks. Find out if there is pending litigation, special assessments, or material deferred maintenance.
- Consider future warrantability. If you value easy resale later, ask whether the association is working toward agency approval.
Steps if you are selling or on the board
If your project has non‑warrantable flags, focus on documentation, reserves, and transparency.
- Upgrade financial documentation. Commission or update a reserve study, fund reserves accordingly, and complete audits or CPA reviews when possible.
- Reduce risk factors. Resolve litigation where feasible, address delinquent dues, and avoid overreliance on commercial space.
- Clarify rental policies. Adopt clear, consistent rental rules and document them for lenders and buyers.
- Engage lenders and consultants. Prepare a thorough package for potential reviews by Fannie, Freddie, FHA, or VA if eligibility is realistic.
- Communicate early. Inform owners and prospective buyers about capital plans and any special assessments.
Document checklist to request
Gather these items as early as possible. A complete package speeds underwriting and reduces follow‑ups.
- HOA governing documents: CC&Rs, bylaws, and current rules
- Most recent annual budget and current year‑to‑date financials
- Latest reserve study and funding history
- Audit or CPA review, if available
- Master insurance declarations and fidelity bond evidence
- Minutes from recent board meetings and special meeting notices
- Owner list with occupancy and rental status
- HOA dues delinquency report
- Details on any pending or threatened litigation, claims, or construction defects
- Special assessments: amounts, purposes, and payment schedules
- Project map noting any commercial or mixed‑use components
- Certificates of occupancy or completion for recent conversions or phases
Timing and costs to expect
Financing a non‑warrantable condo often takes longer and can cost more.
- Timeline. Manual project reviews, document requests, and back‑and‑forth with the association can extend underwriting beyond standard agency timelines.
- Costs. Rates are usually higher, and some lenders add overlays or reserve requirements that affect your cash at closing. Exact pricing depends on the lender, your profile, and project risk.
Strategy for refinancing and resale
- Plan for a future refinance. If the association strengthens reserves, resolves litigation, or gains approvals, you may be able to refinance into a more favorable loan later. There is no guarantee, so buy based on today’s terms.
- Think about resale liquidity. Non‑warrantable status narrows the buyer pool. If you anticipate selling within a few years, weigh the trade‑off between price, location, and financing flexibility.
- Keep your records. Save HOA documents, assessment notices, and insurance updates. A clear file helps the next loan or a future buyer.
Work with a local guide
Sarasota’s condo market is diverse, and each building tells a different story. You deserve a guide who understands how local associations operate, what lenders look for, and how to present your offer with a complete package. Whether you are buying a seasonal condo near the arts or selling a downtown unit, you can move forward with confidence when your agent coordinates the right lenders, documents, and timing. If you prefer to discuss in English or Spanish, you will have clear, timely communication at each step.
Ready to explore your options or request a project review? Start a conversation with Robert Krasow for a focused plan tailored to your condo and your goals.
FAQs
What is a non‑warrantable condo?
- It is a condo project that does not meet the eligibility rules for Fannie Mae, Freddie Mac, FHA, or VA, which limits standard loan options and adds underwriting scrutiny.
Why do lenders avoid some Sarasota condos?
- Lenders may see risks such as high rental concentration, weak reserves, litigation, insurance issues, or pending repairs that fall outside agency guidelines.
Can I use FHA or VA for a non‑warrantable unit?
- Only if the specific condo project appears on the FHA or VA approved list. Many non‑warrantable projects are not approved, so verify early.
How much down payment will I need?
- Requirements vary, but many non‑agency loans expect higher equity. Plan for 15 to 25 percent or more depending on the lender, project, and your profile.
Are rates higher for non‑warrantable condos?
- Yes. Lenders typically price these loans higher than comparable agency loans because of added project risk.
How long does underwriting take?
- It is often longer than a standard condo loan. Manual project reviews, document requests, and HOA communications can extend timelines.
