What are non-warrantable condos anyway?

If you have found your way to our site chances are you have already come across this term, but even some of the most seasoned mortgage and real estate professionals lack an understanding of what this term actually means by definition.

A non-warrantable condo refers to a condo project that is not eligible to be used as collateral for loans sold to Fannie Mae (FNMA). In other words, Fannie Mae has specific requirements for condo projects to be eligible for lending and condos that do not meet their criteria are referred to as "non-warrantable".  Condo projects are considered to be non-warrantable for many different reasons that can range from the percentage of owners that occupy their units, the percentage of owners that are delinquent on their HOA dues, a single person or entity that owns more than 10% of the project or in many cases an active litigation lawsuit among other things. 

Non-Warrantable condos typically present a challenge in financing due to the fact that Fannie Mae purchases a vast majority of commercially available mortgages in the country. This includes most of the loans made by major banks, credit unions and conventional mortgage lenders. 

If you are looking to purchase or refinance a non-warrantable condo it is recommended to select your lender based upon specific experience in working with these types of properties before wasting time and money by attempting this type of financing with traditional lenders.

If you are looking for financing for a non-warrantable condo or are curious if your property is considered to be non-warrantable, please feel free to contact us for free consultation.