# Understanding Temporarily Non-Warrantable Condos

By Sam Ciancio (@samciancio) · Published 2026-09-16

Canonical: https://voce.com/@samciancio/understanding-temporarily-non-warrantable-condos-9foa7l

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If you're buying a unit in a **temporarily non-warrantable condo** in a market like New York, treat the status as a timing question, not a quality verdict. A sound new-development building often can't clear Fannie Mae and Freddie Mac project review simply because it hasn't finished selling, transferring board control, or stabilizing occupancy—all of which resolve with time. The practical move is to bridge the gap with a **portfolio or non-QM loan now**, then refinance into conventional financing once the project becomes warrantable. Below, read why projects land in this status, what separates a temporary situation from a genuine defect, and how to finance the transition period.

## What makes a condo warrantable?

A warrantable condo is one whose association passes the project review standards in the Fannie Mae Selling Guide and Freddie Mac's counterpart guide. That review measures six core criteria: **reserve funding, unit delinquencies, single-entity ownership, presale performance, master insurance, and the share of commercial space** ([GoverningDocs](https://governingdocs.dev/blog/fannie-freddie-condo-rules-2026)). Fail any one and the entire building becomes non-warrantable for every unit owner. In 2026 the bar is rising: the minimum reserve allocation jumps from 10% to **15%** for applications dated on or after January 4, 2027, and the Limited Review shortcut is retired for applications on or after August 3, 2026 ([Fannie Mae LL-2026-03](https://singlefamily.fanniemae.com/media/44986/display)).

Two thresholds do more to knock new construction out of warrantable status than anything else. First, a **presale requirement of at least 50% of units** in a new or newly converted project — units must be conveyed or under contract to principal-residence or second-home buyers before Fannie Mae will back a loan ([GoverningDocs](https://governingdocs.dev/blog/fannie-freddie-condo-rules-2026)). Second, the **single-entity rule**, capping any one owner (typically the sponsor) at 20% of units in a project of 21 or more units ([GoverningDocs](https://governingdocs.dev/blog/fannie-freddie-condo-rules-2026)). A new building that is only half sold, or whose sponsor still holds developer units and controls the board, trips both of these simultaneously. That is why so many brand-new towers sit in what lenders call temporarily non-warrantable territory.