Warrantable and Non-warrantable Condos

The majority of homebuyers use "conforming" mortgage financing.
This means that their loan purchased by one of two government-sponsored entities -- Fannie Mae or Freddie Mac -- and that the loan meets the two group's minimum standards.

Fannie Mae and Freddie Mac use the term "warrantable" to describe condominium projects and properties against which they'll allow a mortgage.
Condo projects and properties which don't meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable.

Non-warrantable condos are more challenging to finance.

 

Typically, a condo is considered warrantable if:

  • No single entity owns more than 10% of the units in a project, including the developer
  • At least 51% of the units are owner-occupied
  • Fewer than 15% of the units are in arrears with their association dues
  • The homeowners association (HOA) is not named in any lawsuits
  • Commercial space accounts for 25 percent or less of the total building square footage

 

Common non-warrantable properties include condotels, time shares, fractional ownership properties, and other projects which require owners to join an organization, such as a golf club.

When buying a condo, please ask me about the building's warrantability before you go any further.