What Is A Non Warrantable Condo?

Are you curious to know what is a non warrantable condo? You have come to the right place as I am going to tell you everything about a non warrantable condo in a very simple explanation. Without further discussion let’s begin to know what is a non warrantable condo?

The world of real estate offers a wide array of housing options, including condominiums. While many condos are relatively straightforward when it comes to financing and ownership, there is a category known as “non-warrantable condos” that can be a bit more complex. In this blog, we’ll explore what a non-warrantable condo is, why it matters, and the implications it has for potential buyers and sellers.

What Is A Non Warrantable Condo?

A non-warrantable condo is a type of condominium unit that does not meet the lending criteria established by government-sponsored entities (GSEs) such as Fannie Mae and Freddie Mac. These entities purchase and guarantee mortgages in the secondary mortgage market, which makes loans for warrantable condos more readily available to borrowers. In contrast, non-warrantable condos do not conform to the GSE guidelines, which makes obtaining financing for them more challenging.

Key Characteristics Of Non-Warrantable Condos:

  1. Investor Concentration: Non-warrantable condos often have a higher percentage of units owned by investors rather than owner-occupants. This can make lenders view them as riskier investments.
  2. Litigation: If a condo association is involved in litigation or legal disputes, it can render the condo non-warrantable. Lenders may see this as an uncertain financial situation.
  3. Delinquent Dues: Condo associations that have a high percentage of owners with delinquent dues or fees may lead to a non-warrantable status.
  4. Reserve Fund: The lack of a well-funded reserve fund for maintenance and repairs can also result in a non-warrantable classification.
  5. Commercial Space: If a condo complex has a significant amount of commercial space, it might be deemed non-warrantable because it doesn’t meet residential occupancy thresholds.

Why Non-Warrantable Status Matters?

The non-warrantable status of a condo can have significant implications for both buyers and sellers:

  1. Limited Financing Options: Buyers looking to purchase a non-warrantable condo may face limited financing options. Traditional lenders may be hesitant to provide mortgages for such properties, which can limit the pool of potential buyers.
  2. Higher Interest Rates: If a lender does offer financing for a non-warrantable condo, it may come with higher interest rates and stricter terms to offset the perceived risk.
  3. Reduced Resale Value: Non-warrantable condos may have reduced resale value compared to warrantable condos because of the challenges associated with financing.
  4. Difficulty in Selling: Sellers of non-warrantable condos may find it more challenging to sell their property due to the limited pool of eligible buyers.
  5. Cash Transactions: In some cases, cash transactions might be the most viable option for purchasing a non-warrantable condo.

Improving Warrantability

Condo associations and property owners can take steps to improve the warrantability of their condominiums:

  1. Owner-Occupancy Requirements: Encourage more owner-occupancy to meet lender criteria.
  2. Resolve Legal Issues: Address any ongoing litigation or disputes within the condo association.
  3. Timely Dues Payment: Ensure that owners are prompt in paying their dues and fees.
  4. Build Reserves: Build and maintain a healthy reserve fund for maintenance and repairs.
  5. Limit Commercial Space: If possible, reduce the percentage of commercial space within the condo complex.


Non-warrantable condos represent a unique subset of condominiums that do not conform to the lending criteria established by government-sponsored entities. While owning or buying a non-warrantable condo is not impossible, it can come with challenges such as limited financing options and potentially higher costs. Therefore, it’s essential for both buyers and sellers to be aware of the non-warrantable status and its implications when considering a condominium transaction.

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What Is The Difference Between Warrantable And Non-Warrantable Condos?

There is a classification system for condo mortgage loans to determine if it is warrantable or non-warrantable. For example, a condo is labeled warrantable if: There are no lawsuits targeting the homeowner’s association (HOA) Less than 15% of the other occupants are in debt with their association dues.

Is It Safe To Buy Non-Warrantable Condo?

Buyers with limited down payment funds (below 20%) are most vulnerable when trying to purchase non-warrantable condos, given their limited options. Unless the condo’s issues are minor and the buyer has robust credit and income, securing financing could pose challenges.

What Does Unwarrantable Mean In Real Estate?

When a condo is labeled as non-warrantable, it means that it does not meet conventional guidelines and will not be bought by government-backed entities like Fannie Mae and Freddie Mac. Many lenders consider financing a mortgage for this type of property to be too risky which can make it harder to finance.

Can You Refinance A Non-Warrantable Condo?

Highlights of our non-warrantable condo loan offering include: Purchase or Refinance. High loan-to-value (LTV) financing and loan limits. Choose between fixed and adjustable rate options.

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