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What is a Condo Questionnaire?

A condo questionnaire is a document lenders require to fund a property designated as a townhouse or condominium that’s part of a homeowner’s association. The document offers evidence that condominium projects such as Eighty Seven Park Miami comply with the lender’s underwriting prerequisites.

Moreover, it offers a way of obtaining some significant facts regarding the stability of your possible real estate investment as well as a future home. If you’re looking to invest in our luxurious condominiums at Eighty Seven Park, here’s what you should know about the document.

What a Condo Questionnaire is

Lenders use the document to screen homeowners associations with a similar intensity prospective renters and buyers face. They do so because the federally backed funding sources (Freddie Mac and Fannie Mae) need it.

If the condo development doesn’t meet eligibility prerequisites, nobody can obtain conventional mortgage funding to purchase in that development. The huge drawback for a buyer is that if the development doesn’t meet eligibility, they probably won’t obtain a government-backed loan for it and they’ll need to pay a bigger deposit if they decide to obtain funding another way.

Therefore, the questionnaire requirement makes purchasing Eighty Seven Park pre construction more complex for all parties.

How a Condo Questionnaire Works

Lenders consider condominium units riskier than single-family homes because the physical and fiscal well-being of the entire development affects the unit’s value. If other residents fall behind on their association fees, it influences the community’s fiscal health.

Similarly, if a high proportion of non-occupant owners rent out their units without maintaining them, it affects the community’s physical state. Therefore, association managers or HOAs are supposed to fill out the form upon a lender’s request.

It offers information regarding whether development is warrantable. Previously, lenders used to write up condominium questionnaires, but this changed in 2016. Freddie Mac and Fannie rolled out standardized questionnaires, thus streamlining and generating consistency in the review process. While some lenders use theirs, the standardized forms are easy to process and access.

Condominium Lender Prerequisites

Condominium lenders assume a great risk when funding a condo construction. As a result, a lot of work must take place in document execution before breaking ground. Due diligence must take place to make sure the property is marketable upon completion and the purchase contract must specify there’ll be a sufficient number of sales.

Consequently, lenders typically take extra care to prevent any errors in documenting the legal roles with the developer and other stakeholders in the contract.

Warrantable vs. Non-warrantable Condo

Eighty Seven Park

For a condominium development to be warrantable, it must meet an extensive requirement list laid by Freddie Mac and Fannie Mae. Some of the limitations might seem apparent. For instance, the unit can’t be part of a houseboat project or timeshare.

A warrantable condo ensures that at least 10% of the yearly budget goes to reserves and at least ½ the units should be owner-occupied. Before investing in a condo development, we recommend you verify whether it qualifies for government-funding.

Establishing whether your condominium is warrantable isn’t easy. After all, Freddie Mac and Fannie Mae don’t maintain a public list of endorsed projects. Rather, your lender might need to order a condo review to establish whether the property is warrantable.

If you’re considering a condo investment, we recommend you consult a real estate agent who should inform you upfront. If he doesn’t, you might struggle to acquire financing. Fortunately, you’ll discover that our Eighty Seven Park pre-construction condos are warrantable and worth the investment.

A non-warrantable condominium doesn’t fulfill all of Freddie Mac or Fannie Mae’s lending requirements. Beware that it can be challenging to secure financing for a non-warrantable development. Regardless of how creditworthy you are, locating a lender that underwrites mortgages for non-warrantable units might be hard. A condo development isn’t warrantable if it’s party to a lawsuit; it operates as a motel or hotel, also called condotel; requires membership, for instance, country club or golf club.

Drawbacks of non-warrantable condominiums

Issues purchasing the condominium

 As a purchaser, you’ll need to meet eligibility for a portfolio bank loan rather than a conventional loan. While lending practices vary across banks, you can expect strict underwriting criteria. You might need a huge down payment to purchase the unit.

Issues with the condo’s fiscal health

Development might be non-warrantable because numerous owners are delinquent on association dues or if the project sends inadequate money to its reserve fund for emergency costs. Both signs reveal that the HOA might have cash flow issues. If an association can’t meet its economic obligations, owners might witness an increase in their association dues. In some instances, owners might need to pay a special evaluation to cover necessary improvements and repairs.

Issues selling the unit

When the time comes to sell a non-warrantable unit, it will attract a smaller portion of buyers. Numerous purchasers won’t have the essential credit or down payment needed to secure a portfolio loan.


Ability to secure funding

From the surface, a non-warrantable and warrantable condominium might appear similar. However, whether your unit is warrantable makes a difference in your capacity to invest in the property. If you discover a development is non-warrantable, consider the risks before investing.

Most people buy a condominium to serve as a vacation home or personal residence, but they can make great investments. They’re particularly appealing for beginner investors or those who seek turnkey properties. That’s because they typically need fewer repairs, and can be a cheaper alternative to single-family homes in a similar market.