A non-warrantable condo is a unit in a project that does not meet Fannie Mae or Freddie Mac approval requirements. That means no conventional or FHA financing through standard channels. The property itself may be perfectly livable -- the issue is project-level characteristics that Fannie and Freddie have decided they do not want in their portfolios.
What Makes a Condo Non-Warrantable
- ✦Single entity owns more than 10% of the units in the project (investor concentration)
- ✦Commercial space exceeds 35% of total project square footage
- ✦More than 35% of units are investor-owned (owner-occupancy ratio too low)
- ✦The project has active or pending special assessments that are material and undisclosed
- ✦The HOA is delinquent on its budget or has pending litigation related to the project's physical structure
- ✦Hotel or transient use permitted: the project allows nightly rentals through platforms like Airbnb
- ✦New construction: projects less than 90% pre-sold are typically ineligible for conventional financing
Florida Condos: An Extra Layer of Complexity
Florida's condo market has additional scrutiny since the Surfside collapse in 2021 and subsequent state legislation requiring structural inspections and reserve funding. Many Florida condo HOAs have deferred reserve contributions for years, and the new law is forcing significant special assessments. A Florida condo that passed review in 2022 may fail today if the HOA has issued a material special assessment or failed to complete required inspections.
Lenders With Portfolio Programs for Non-Warrantable Condos
- ✦Acra Lending: DSCR on non-warrantable condos including condotels for investment properties; 620+ FICO
- ✦Change Wholesale: condotels and non-warrantable accepted on non-QM programs; up to $3M
- ✦Verus Mortgage Capital Investor Solutions: non-warrantable condo on DSCR; up to $3.5M
- ✦CrossCountry Mortgage Signature Expanded: non-warrantable condo on DSCR and bank statement programs
- ✦Griffin Funding: portfolio jumbo with non-warrantable condo exceptions for primary, second home, and investment
How to Identify Non-Warrantable Status Before Application
Request the HOA questionnaire (Form 1076 for Fannie Mae) early in the process. The answers will reveal investor concentration, owner-occupancy ratios, pending litigation, and special assessment history. For Florida condos, specifically ask about required structural inspections and the reserve funding status under the new state law. Knowing non-warrantable status at application lets you route to the right lender from day one rather than switching programs after an appraisal.
Aria knows which lenders accept non-warrantable condos and condotels, by loan type and state. Ask Aria to route a non-warrantable condo deal at vicariointel.com.
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