What Is a Non-Warrantable Condo?
A non-warrantable condo is any condominium that does not meet Fannie Mae or Freddie Mac eligibility requirements. Common reasons include: more than 50% of units are investor-owned, the HOA is involved in litigation, one entity owns more than 20% of the units, the project has commercial space exceeding 35%, or the property operates as a hotel/resort (condotel).
If a condo is non-warrantable, you cannot get a conventional Fannie/Freddie loan. You need a portfolio lender or non-QM lender that underwrites on property fundamentals rather than agency guidelines.
The most common rejection: Investor concentration. If more than 50% of units in a condo project are owned by investors, the entire project becomes non-warrantable. This is extremely common in resort, beach, and urban high-rise markets.
Who This Is For
- Buyers purchasing condos in high-investor-concentration buildings
- Hotel-condo and condotel buyers
- Buyers in projects with pending HOA litigation
- Investors buying in buildings with single-entity ownership concentration
Key Features
Rates run 0.5-2% higher than warrantable condo loans. Down payments from 20-30%. Credit scores from 660-700 minimum. Available as DSCR (investment) or full-doc (primary). Loan amounts up to $3M+. The key is finding a lender that specifically underwrites the non-warrantable issue your condo has.