Condo Financing: Warrantable vs. Non-Warrantable

A condo loan can become more complicated even when your credit and income are strong. Sometimes the issue isn't the buyer, but the building itself. If a project doesn't meet Fannie Mae or Freddie Mac eligibility requirements, standard conventional financing may not be available. At Northpointe Bank, certain non-warrantable condo projects may still have financing options. Here's what separates a warrantable condo from a non-warrantable one, and what buyers should know before they make an offer.

What makes a condo warrantable?

A warrantable condo simply means the project meets the standards that allow a lender to sell the loan to Fannie Mae or Freddie Mac, the agencies that set the rules most conventional loans follow. When a building clears those checks, a wider group of lenders can offer conventional financing on units in it.

The test looks at the association as a whole, not just your unit. Fannie Mae weighs several factors together including but not limited to: replacement reserves, the share of units that are delinquent, how much of the project a single entity owns, and the amount of commercial space. Under current guidance, commercial space generally cannot exceed 35% of the project, and one entity may own no more than 20% of the units in a project with at least 21 units.

In 2026 Fannie Mae and Freddie Mac tightened the rules further. Replacement reserve minimums are moving from 10% to 15% of the association's annual budgeted assessment income in January 2027, and the Limited Review process has been retired (GoverningDocs).

When does a condo fall outside the standard box?

A non-warrantable condo is a unit in a project that fails at least one of those eligibility tests, even though the unit itself may be in great shape. The gap usually sits with the building: an association with thin reserves, one owner holding a large share of units, litigation, or commercial space that pushes past the limit. None of these make a unit unlivable, but they do change how it can be financed.

Here is the part that surprises buyers most. You may meet the borrower qualifications, but financing can still be affected if the condo project doesn't meet applicable eligibility requirements. A unit can be desirable and well located while still falling outside the conventional box for mortgage purposes.

How the Northpointe approach opens more doors

When a condo project doesn't meet standard agency requirements, conventional financing may not be the only option. Northpointe offers financing options for certain non-warrantable condo projects, with project eligibility reviewed based on program guidelines.

That can provide another financing path for qualified buyers interested in a condo that may not meet Fannie Mae or Freddie Mac project requirements. Because every project is different, it's important to review the building early and understand what financing options may be available before moving too far into the purchase process.

Working together to get you to closing

If you are a buyer, a helpful first step is to check the project early, before you make an offer. Share the building's name and association details with a lender who understands condo financing, so we can confirm how the unit might be financed before you commit. That saves the disappointment of a deal that stalls late in the process.

If you are a real estate agent, this is a chance to solve a problem for your clients instead of steering them away. When a listing presents financing challenges, understanding whether additional condo financing options may be available can help you better guide your clients. Send over the project details, and we can look at what is possible.

The goal is straightforward: you find the condo you want to call home, and we may be able to find a workable path to get there. Reach out any time with the project in question, and let us explore the options together.

If you have questions about financing a condo, or a project that has been called difficult, I would be glad to look at the specifics with you.