Why We Suggest Using Local Lenders On Sanibel

Being an Island resident, I tend to think everything is better “local.” There are very few “chain” corporations on island, and lots of local mom and pop shops that make Sanibel and Captiva unique.


However, when it comes to choosing a bank and lender for your Sanibel home purchase, I can understand why customers might choose a national bank, or their trusted local bank up north. It’s important to have a sense of security with your home mortgage lender.

With that said, there are a number of times where my clients have run into complications with their national lender, especially when financing a condo here on Sanibel Island. You see, many of the condos on island are considered “non-warrantable” by lenders, making it hard to get a conventional loan for these condos.

What Does Non-Warrantable Mean?

A non-warrantable condo is one that does not meet the conventional loan guidelines needed in order for Fannie Mae or Freddie Mac to buy the loan. Since Fannie Mae or Freddie Mac buy almost all conventional loans, this causes a major problem for your condo purchase.


How Do You Know If A Condo Is Warrantable?

A condo questionnaire is what lenders use to determine whether or not the condo is warrantable. The down side? The condo questionnaire is usually one of the last steps lenders take before closing. In addition, Sanibel’s unique vacation market can present misunderstandings when viewed as a set of check boxes and fill-in-the-blanks.

That’s why we suggest interviewing a few of our local lenders on and off island, who know and understand the process like the back of their hand! These financial experts have experience working with our island’s non-warrantable condos, and have creative solutions for helping you obtain the loan you need.


For example, portfolio loans are one way “around” financing a non-warrantable condo. These loans are kept in the lender’s portfolio as opposed to being sold on the secondary market. This gives the lender more flexibility, and allows them to assess the situation from a common sense standpoint, as opposite to a check-in-the box approach.

What Makes A Condo Non-Warrantable Anyways?

There are many reasons that can get complex, but some of the main issues that affect our market include, if:

  • The condo master insurance policy does not satisfy lender guidelines
  • The condo budget does not have adequate reserves (must be 10% or more of gross annual dues)
  • The condo has mixed use spaces (restaurant, retail shopping, etc.) 
  • The condo operates as a “condotel” in terms of vacation rental management
  • The condo offers daily maid service
  • …and the list goes on

In some cases, a particular condo might qualify, but the association chooses not to apply for warrantable status for reasons of its own.

Non-Warrantable Condos Sanibel

See how this can create a problem for lenders that are unfamiliar with how Sanibel and Captiva operate? While conventional loans with national banks can certainly be done, I have found in my years of experience that working with local lenders is a much smoother process all around, with fewer heartbreaks and disruptions along the way.

Have questions about our local lenders? We’re happy to share contact information with you and tell you more about our experiences working with these trusted companies. So, don’t hesitate to reach out – 239-472-1950, or susan@mccallionrealty.com.

Susan McCallion About Susan McCallion

Meet "Your Favorite Redhead." Susan was exposed to real estate while young with her parent's 8 Re/MAX offices in Connecticut! In 2008, Susan and Jim became permanent Sanibel residents, starting McCallion & McCallion to bring a fresh approach to real estate.