When financing a condo, the available loan programs depend on the type of condo.

• A Warrantable condo meets Fannie Mae guidelines, so it can qualify for a standard mortgage with lower interest rates.
• A Non-Warrantable condo does not meet those guidelines, so it must be financed through a Non-QM loan, which may result in higher interest rates and a larger down payment.

1) Warrantable Condo

A condominium that meets Fannie Mae / Freddie Mac guidelines.  This means it qualifies for standard mortgage programs (QM Conventional Loans).

Typical Requirements

• • • 51% or more of the units are owner-occupied (not investor-heavy)

    • No single owner holds more than 20% of the units in the project

    • HOA (Homeowners Association) has healthy financial reserves

    • No significant pending litigation

    • Rental / investor occupancy ratio is not excessively high

    • The property is not operated like a hotel or condotel

Summary: Financially stable, primarily owner-occupied condo → Eligible for standard mortgages / lower rates

2) Non-Warrantable Condo

A condominium that does not meet Fannie / Freddie requirements.

Common Reasons

• • • High percentage of rental units

    • Insufficient HOA reserve funds (e.g., does not meet the 10% reserve guideline)

    • A single owner owns multiple units in the project

    • The building or HOA is in litigation

    • Short-term rentals / Airbnb allowed at high levels

    • Operates similar to a condotel

Summary: Considered higher risk → Not eligible for standard mortgages, requires Non-QM or portfolio loans with higher rates and costs.

Loan Comparison

Practical Check Process

Request the following documents from the HOA:

1. 1. Condo Questionnaire

   2. Budget + Reserve Statement

   3. Master Insurance Policy

   4. Litigation Letter

→ These documents allow the lender to determine warrantability.