Warrantable vs. Non-Warrantable Condos: What Every Buyer Needs to Know Before Financing

One overlooked detail could turn your dream condo into a financing nightmare.

You’ve been searching for the perfect place to call home. Something that suits your lifestyle without the constant upkeep of a traditional house.

Then, you find it: a beautiful condo that offers everything you’ve been looking for. It offers you the private space you want, access to amenities like a pool and a gym, and a welcoming condo community.

You’re ready to buy.

But just as you’re about to take the next step, the lender asks a question you didn’t see coming: “Is the condo property warrantable or non-warrantable?”

The answer can change everything about your financing options. 

Suddenly, you’re not sure if this dream condo is still within reach.

This guide will turn confusion into clarity.

You’ll discover exactly what warrantable and non-warrantable condos mean, how to identify which one you’re dealing with, and most importantly, how to secure the right financing. By the end, you’ll be ready to move forward with confidence and turn that dream condo into your new home.

What Are Warrantable and Non-Warrantable Condos?

When you’re buying a condo, it will be classified as either warrantable or non-warrantable. 

These labels might seem like technical jargon, but they directly impact your financing options.

Because condos are part of larger communities with shared spaces and a homeowners association (HOA), lenders don’t just consider your finances. They also evaluate the financial health, management, and stability of the entire condo project.

This is where the difference between warrantable and non-warrantable condos matters. And understanding its status will help you choose the right financing option to ensure a smooth path to ownership.

What Makes a Condo Warrantable?

A warrantable condo is a property that meets lending standards set by Fannie Mae and Freddie Mac, the two government-backed organizations that support most conventional mortgages. 

These standards exist to ensure that the condo is a stable, well-managed investment for both lenders and buyers.

Lenders see warrantable condos as lower-risk because they meet specific guidelines designed to protect against financial instability and legal problems. As a buyer, this means you’ll have access to better financing options including lower interest rates, smaller down payments, and faster approvals.

If you're looking for a condo that will have a straightforward, simple financing process, these are the set of standards to look for.

Owner-Occupancy Requirement:

At least 50% of the units must be owner-occupied, meaning owners live in the units rather than renting them out. This promotes a stable, community-driven environment.

Ownership Concentration Limit:

No single entity—whether a person, business, or investor—can own more than 20% of the total condo units. This prevents any one party from having excessive control over the property.

Strong Financial Health of the HOA:

The HOA must demonstrate sound financial management, which includes:

• Maintaining adequate reserve funds (typically at least 10% of the annual budget).
• Keeping delinquency rates low, with few owners behind on HOA dues.

No Active Litigation:

The property must be free of ongoing legal disputes that could threaten its financial stability or value.

Limited Commercial Space:

The building should be primarily residential, with commercial space typically making up no more than 35% of the total square footage. 

This ensures the property is focused on residential living rather than business operations.

What Makes a Condo Non-Warrantable?

A non-warrantable condo is simply one that doesn’t meet the standards listed above.

These properties are seen as higher-risk by lenders, often due to factors like too many rental units, financial trouble within the HOA, or ongoing lawsuits involving the building or condo association.

As a result, many conventional lenders may choose not to finance non-warrantable condos. 

But that doesn’t mean you’re out of luck. It just means you’ll need to explore alternative financing options that are built specifically for unique or higher-risk properties.

With the right lender and a smart financing strategy, you can secure a loan that works for your situation. 

How to Finance a Non-Warrantable Condo

Below is a clear breakdown of the financing paths available to help you purchase a non-warrantable condo with confidence.

1. Portfolio Loans:

Portfolio loans are offered by lenders who keep the loan on their own books rather than selling it to investors. 

This means the lender can set their own terms, which can be more flexible. However, it also means interest rates are often higher.

• Available through local banks, credit unions, and lenders who specialize in non-warrantable properties.
• More flexible terms but may come with higher interest rates.

2. Non-QM Loans (Non-Qualified Mortgages):

Non-QM loans are designed for buyers or properties that don’t meet conventional lending guidelines. 

They can provide options like adjustable interest rates, interest-only payments, or other flexible terms.

• Ideal for buyers with unique financial situations or condos that don’t fit standard lending criteria.
• Offers flexible terms, but rates may be higher than conventional loans.

3. Private Financing:

Private financing means borrowing directly from private investors, specialized mortgage companies, or hard money lenders. 

This is often a last resort for buyers who can’t secure other options.

• Highly flexible, with terms set by the lender and borrower.
• Typically comes with higher interest rates and fees.

What to Expect When Using Non-Warrantable Condo Loans:

Because a non-warrantable condo is considered higher-risk, lenders often take extra precautions.

Here’s what you can expect:

Higher Down Payments

Be prepared to put down at least 20% of the condo’s purchase price. 

Some lenders may require even more, depending on the level of risk they see in the property.

Higher Interest Rates

Non-warrantable condo loans often come with higher interest rates. 

This is because lenders can’t sell these loans to Fannie Mae or Freddie Mac, which means they are taking on more risk themselves.

Stricter Qualification Requirements

Lenders may ask for a higher credit score, stronger income verification, or more detailed financial documentation. 

They want to be confident that you can manage the higher-risk loan.

Thorough Review of the Property

Lenders will carefully examine the condo’s financial health, including the homeowners association (HOA) documents, reserve funds, and any legal issues that could affect the property’s value.

Tips for Getting the Best Non-Warrantable Condo Mortgage

Financing a non-warrantable condo can be challenging, but working with an experienced lender like Seattle's Mortgage Broker can make all the difference. 

Here are a few expert strategies to help you secure the best mortgage:

1. Work with a Lender Who Has a Strong Network

Experienced lenders like Seattle’s Mortgage Broker maintain relationships with a wide network of lenders, including those who specialize in non-warrantable properties. 

This means they know which lenders offer the most competitive rates and flexible terms, giving you more options and a better chance of approval.

2. Get a Customized Financing Strategy

Non-warrantable condos are unique, and a one-size-fits-all approach won’t work. 

A knowledgeable lender will take the time to understand your financial situation, the property details, and your long-term goals. Based on this information, they recommend the best financing solution—whether that’s a portfolio loan, a non-QM loan, or a creative hybrid option.

3. Access Specialized Loan Programs

An expert lender like Seattle’s Mortgage Broker can offer access to specialized loan products that you won’t find everywhere. 

This includes custom portfolio loans, flexible non-QM options, and even exclusive lender programs designed for unique or high-risk properties. More options mean better chances of finding the perfect loan for your situation.

By choosing a lender who understands non-warrantable condos and has the right connections, you can make the financing process smoother, faster, and more successful.

Choosing the Right Mortgage Lender

Whether the condo you love is warrantable or not, a path to purchase exists. You just have to find it.

Specialized loan options exist for non-warrantable condos. At Seattle’s Mortgage Broker, we bring more than 20 years of experience in the mortgage industry to help buyers just like you navigate complex condo financing with confidence.

Our team has the expertise to review HOA documents, connect you with the best lenders, and design a financing strategy tailored to your needs. 

We make the process clear, straightforward, and stress-free.

Ready to take the next step toward owning your condo?

Reach out to Seattle’s Mortgage Broker today for expert guidance, personalized financing options, and a smoother path to closing. 

We’re here to help you turn your dream condo into a reality—no matter its label.