HELOC on a Condo: Yes You Can, But Here's What You Need to Know

Good news first: Yes, you can get a HELOC on a condo.

Now the catch: Condos have extra requirements that single-family homes don't. Your condo's building and HOA need to meet certain standards before lenders will approve a HELOC.

Here's everything you need to know about getting a HELOC on your condominium.

The Condo HELOC Catch: Warrantable vs. Non-Warrantable

When you apply for a HELOC on a condo, lenders don't just evaluate you—they evaluate your entire condo project.

Condos fall into two categories:

Warrantable Condos: Meet Fannie Mae and Freddie Mac guidelines. Most lenders will approve HELOCs on these properties.

Non-Warrantable Condos: Don't meet standard guidelines. Many lenders won't touch them. Those that do charge higher rates.

Your condo being warrantable is often the difference between approval and rejection.

What Makes a Condo Non-Warrantable?

Your condo project may be non-warrantable if:

1. Too Much Commercial Space

More than 35% of the building's total floor space is commercial (retail, offices, restaurants). Mixed-use buildings often fail this test.

2. Single-Entity Ownership

One person or company owns more than 10% of the units. This signals investment risk—if that owner stops paying HOA dues, the building's finances suffer.

3. HOA Delinquencies

More than 15% of unit owners are 60+ days late on HOA dues. High delinquency rates signal financial instability and deferred maintenance.

4. Insufficient Reserves

The HOA doesn't have adequate reserves for major repairs. Lenders typically want to see reserves covering at least 10% of the annual budget.

5. Active Litigation

The HOA is involved in active lawsuits (other than minor collections). Pending litigation creates uncertainty about building finances and insurability.

6. Hotel or Timeshare Elements

The project operates like a hotel, has mandatory rental pools, or includes timeshare units. These signal transient use rather than residential stability.

7. High Investor Concentration

More than 50% of units are investor-owned (not owner-occupied). High rental concentration increases risk.

The HOA Questionnaire: What Lenders Want to Know

When you apply for a HELOC on a condo, your lender will likely require an HOA questionnaire. This is a document your HOA completes that reveals:

• Number of units and owner-occupancy rate
• Current and delinquent dues
• Reserve fund balance
• Pending litigation
• Insurance coverage details
• Commercial vs. residential space
• Single-entity ownership concentration

Heads up: Your HOA may charge $150-$400 to complete this questionnaire. Factor this into your HELOC costs.

Some HOAs respond quickly. Others take weeks. Start this process early if you're on a timeline.

What If Your Condo Is Non-Warrantable?

Don't panic. You still have options:

Option 1: Portfolio Lenders

Some lenders keep loans in their own portfolio rather than selling to Fannie/Freddie. They may have more flexible condo requirements. Credit unions and local banks are good places to look.

Option 2: Non-Warrantable Specialists

A few lenders specialize in non-warrantable condo financing. They exist because the need exists. Expect higher rates (often 1-2% above standard) and more scrutiny.

Option 3: Wait for Change

If your building is close to warrantable status—say, delinquencies are at 16% and need to drop to 15%—waiting a few months might solve the problem.

Option 4: Personal Loan

Not ideal, but if you only need a small amount, an unsecured personal loan avoids the condo qualification issue entirely. Higher rates, but faster and simpler.

Standard HELOC Requirements Still Apply

Being in a warrantable condo gets you past the first hurdle. You still need to meet standard HELOC requirements:

Condo-specific note: Lenders often require more equity in condos than single-family homes. Where a house might need 15% equity, a condo might need 20-25%.

Getting Started: Your Condo HELOC Checklist

Before applying, gather this information:

• Know your equity - Recent sale prices for similar units in your building
• Check your HOA's financial health - Ask about delinquency rates and reserves
• Confirm warrantable status - Ask your HOA if the building is Fannie Mae/Freddie Mac approved
• Get the questionnaire fee - Ask your HOA how much they charge and how long it takes
• Check your credit - Pull your reports before applying
• Calculate your DTI - Know where you stand before lenders ask

Condo vs. Single-Family HELOC: Key Differences

The Bottom Line

Condo HELOCs are absolutely possible—they just require an extra step. Your building needs to pass muster, not just you.

The key is knowing your condo's status early. If you're in a well-run, owner-occupied building with healthy HOA finances, you'll likely qualify just like any homeowner. If your building has issues, you'll know upfront and can explore alternatives.

At HonestCasa, we help condo owners navigate these extra requirements. See if your condo qualifies →

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FAQ

Is it harder to get a HELOC on a condo?

It can be. Lenders evaluate the entire condo project, not just your unit. If your building is warrantable and well-managed, approval is straightforward. Non-warrantable condos face more challenges.

What is a warrantable condo?

A condo that meets Fannie Mae and Freddie Mac guidelines. This includes requirements about commercial space, owner occupancy, HOA finances, and litigation status. Most lenders only offer HELOCs on warrantable condos.

How do I find out if my condo is warrantable?

Ask your HOA directly, or check Fannie Mae's condo lookup tool. Your lender will also verify this during the application process via the HOA questionnaire.

Do I need more equity for a condo HELOC?

Often yes. While single-family homes may qualify with 15% equity, condos typically need 20-25% equity remaining after the HELOC.