A warrantable condo is in a building that meets Fannie Mae and Freddie Mac’s rules, so standard loans work. A non-warrantable one doesn’t, often for a reason that has nothing to do with your unit, and needs a specialist lender.
Side by side
| Warrantable condo | Non-warrantable condo | |
|---|---|---|
| Building rules | Meets agency project guidelines | Fails one or more of them |
| Common reasons | None | One owner holding many units, litigation, low reserves, commercial space, short-term rentals or open repairs |
| Loans available | Conventional, and FHA or VA if the building is approved | Portfolio and non-QM loans |
| Pricing | Standard | Usually higher |
| Resale | Wider pool of buyers | Smaller pool, since every buyer faces the same financing limits |
When a warrantable condo fits
- You want the most loan options and the lowest cost.
- You may need an FHA or VA buyer when you sell.
When a non-warrantable condo fits
- The building, location or price is right and the issue is understood.
- The issue is temporary, such as repairs or a lawsuit that will be resolved.
- You plan to refinance once the building qualifies.
Guides and calculators
Questions
Is it a bad idea to buy a non-warrantable condo?
Not by itself. The question is why the building fails and whether it will be fixed. Litigation over a roof is different from a building run as a hotel. I find out before you commit. See also: Condo financing.
Who finances non-warrantable condos?
Portfolio lenders and non-QM lenders, which set their own building rules. I compare several, because each accepts different issues.
How do I find out if a condo is warrantable?
The lender reviews the building’s questionnaire, budget, insurance and any litigation. Send me the building and I can often tell you early which issues will matter. See also: Condo financing.
