Massachusetts Condo Loans, Including FHA, VA & Non-Warrantable Condos

Lenders use the term "warrantable" to describe a condo in a development that satisfies Fannie Mae's project rules. Under Fannie Mae's Selling Guide, a project is ineligible (non-warrantable) if commercial space exceeds 35%, a single entity owns more than 20% of units in a 21+ unit building (or more than 2 units in a 5–20 unit project), unfunded critical repairs exceed $10,000 per unit due within 12 months, or there is pending litigation over safety, structural soundness, habitability, or functional use. Under a Full Review, the association budget must also provide replacement reserves of at least 10% (or have an acceptable reserve study within 3 years), and no more than 15% of units can be 60 or more days past due on common expense assessments.

Possibly, through FHA Single-Unit Approval. Under HUD's condo rules, a lender can submit Form HUD-9991 for an individual unit in an unapproved project if the building is complete and ready for occupancy, has at least 5 dwelling units, is not manufactured housing, and meets HUD's owner-occupancy and financial condition standards. Under Single-Unit Approval, FHA concentration is capped at 10% of units in projects with 10 or more units, or a maximum of 2 FHA-insured units in projects with fewer than 10 units.

Under Fannie Mae Selling Guide topic B4-2.1-02, project eligibility review is waived for detached condo units, units in 2-to-4-unit condo projects (common with Massachusetts two- and three-family condo conversions), and units in 5-to-10-unit projects that are not part of a larger development or master association. It is also waived for certain Fannie-to-Fannie limited cash-out refinances up to 80% loan-to-value, though insurance and priority-of-assessment rules still apply.

Under M.G.L. Chapter 183A, Section 6(d), a 6(d) certificate is a statement from the organization of unit owners showing any unpaid common expenses and other assessed sums against the unit, including any amount the association claims has six-month priority over a first mortgage under Section 6(c). The association must furnish it within 10 business days after receipt of a written request upon payment of a reasonable fee. Once recorded at the Registry of Deeds at closing, the 6(d) certificate binds the association and discharges the unit from any lien for other unpaid sums.

Yes, if the unit is in a VA-approved condo project. A VA purchase loan requires no down payment as long as the sales price is not higher than the home's appraised value, and it has no private mortgage insurance. VA maintains its own list of approved condo projects (it does not accept FHA/HUD condo approvals in place of VA review), and if a building is not yet on VA's list, the project must be submitted to VA for review.

First, confirm that the master deed, declaration of trust or bylaws, and rules allow leasing. Second, in cities and towns that adopt the M.G.L. c.59 s.5C residential exemption (up to 35% of the average assessed residential value), only an owner-occupied principal residence qualifies — investor units do not receive it. Finally, if you rent a condo for 31 consecutive calendar days or fewer, Massachusetts treats it as a short-term rental under M.G.L. c.64G, which requires registration with the Department of Revenue, a 5.7% state room occupancy excise, local option excises up to 6% (up to 6.5% in Boston, plus a 2.75% excise in towns that belong to the Cape Cod and Islands Water Protection Fund and potential community impact fees up to 3%), and compliance with strict municipal rules such as Boston's owner-occupancy requirement.