What is a warrantable condo? A condominium project that meets Fannie Mae's and Freddie Mac's project standards, so a conventional loan on a unit inside it can be sold to them.
A warrantable condo is a condominium project that passes the project review Fannie Mae and Freddie Mac require before they will buy a loan secured by a unit in it. The review is of the project, not of the borrower, and that is the part people find surprising: a buyer with excellent credit and half the price in cash still cannot get an ordinary conventional loan in a project that fails it. The lender runs the review off a questionnaire the association fills in.
The agencies' rules change and the lender applies the current version, but the recurring tests are these. Enough of the units held by owner-occupants or second-home owners rather than as rentals, and no single person or entity owning more than a stated share of them. No more than about 15 percent of the units 60 or more days behind on their dues. A budget putting roughly 10 percent of its income into replacement reserves. Commercial and non-residential floor area held under about a third. No litigation over the structure or the safety of the building, and no hotel-style operation: a front desk, nightly rentals, a rental pool. Since 2022 the review has also asked about significant deferred maintenance and about any special assessment levied for critical repairs.
A project that fails is called non-warrantable, and financing moves to a lender that will keep the loan on its own books. That commonly means a larger down payment and a higher rate, and a smaller pool of buyers when it is time to sell, because the next buyer meets the same wall. Condotels, projects still under construction and buildings that have drifted heavily investor-owned are the usual valley examples. FHA and VA keep their own approved-project lists rather than using the agencies' rules, and FHA has approved single units inside unapproved projects since 2019, so non-warrantable to Fannie Mae is not the end of the question. None of this has to be guessed at: the lender orders the project review, and the resale package carries the budget, the reserve study and the litigation disclosure it runs on.
A worked example
Two near-identical two-bedroom units list at $310,000 in different buildings. The warrantable one takes a conventional loan at 10 percent down, $31,000, at the going conventional rate. The other is heavily investor-owned and needs a portfolio loan: 25 percent down, $77,500, at a rate a full point higher, which on the $232,500 borrowed is roughly $160 a month more before a dollar of dues.
Questions people ask
How do you find out if a condo is warrantable?
Ask the lender to run the project review, which is the only answer that binds anybody. The inputs are in the association's resale package: the budget and its reserve line, the owner-occupancy and delinquency figures, the insurance certificate and any pending litigation.
Can you get an FHA loan on a non-warrantable condo?
Possibly, because FHA keeps its own approved-project list rather than applying the agencies' rules, and since 2019 it can also approve a single unit inside a project that is not approved. Non-warrantable to Fannie Mae does not automatically mean ineligible for FHA or VA.