Non Warrantable Condos

Real Estate Agent with RE/MAX Bryan-College Station TREC# 499368

In buying a condo in Bryan or College Station, whether for students or singles, there are some things that you need to know to get the best deal possible.  Potential issues come up for condos, typically only in the lower priced ones, but you, as a potential buyer, need to be aware and prepared for them.

Non-Warrantable Condos-one of the first things we do with a condominium purchase is to have a condo questionaire filled out.  In this questionaire there are several items that can have a big impact on your purchase.  These are to determine whether the property is eligable for regular warrantable loans, sold to Fannie Mae or Freddie Mac or a non-warrantable loan that is not eligable for the normal loan programs.  The non warrantable properties are presumed to be a bit riskier an investment because of several factors.  Most loans get called non warrantable because of a property condition.  Thought there is a whole checklist that must be gone through, The most common of these is below a 60% owner-occupancy rate in the complex.  The reason that lenders are affected by this is that there is a perception that owner-occupants will work harder to pay their loan than investors.  If a major portion of the condo is held by investors and many default the HOA may have issues paying for the maintenance of the grounds or exterior of the units.

How does this affect you as a condo purchasor?  First, don't think you will get into these condos with 3%-5% down.  Non warrantable condos are best purchased by strong borrowers that have 20-25% down payments available.  The interest rate is bound to be a bit higher, since it is considered a riskier loan.  The normal 6.25% interest rate isn't what you will see with these units.

Are these bad investents?  Not at all, just something to be considered carefully before you invest.  Currently I am purchasing a one bedroom/one bath condo in Doubletree Condominiums.  Rentals over there for these units are $550 a month and up.  I am paying $43,500, and putting 20% down.  My total payment on a 15 year fixed at 6.61% interest, with HOA fees (115.60 a month), taxes, insurance and principal and interest will run $515.  In 15 years it will be paid off and the profit will be mine.  Meantime the rent will go up and the return will be even better.

If you're looking for a property like this, or something a bit bigger, go to my web site at


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Chris Tesch

RE/MAX Bryan-College Station


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Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

near the univeristy of colorado there are many places for condos and students love them, great information :P
Ray Saenz


Jun 26, 2008 04:51 PM #1
Wendy Montoya, REALTORĀ® Broker Associate, 254-315-4906
Towne Adams REALTORS - Waco, TX

Chris, this is great advice that I bet many people have no idea about. Need to understand what you are getting into and how it may affect the purchase and future worth of the home.

Jun 27, 2008 03:09 PM #2
David Marks
Finance One Asset Management ( - Los Angeles, CA

We are closing non warratable condos nationwide...great rates up to 80% LTV.


David Marks


Aug 29, 2011 12:36 PM #3
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Chris Tesch

College Station, Texas Real Estate
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