Non-Warrantable Condo Loans. When the Condo Says No, We Say Yes.
Conventional lenders decline non-warrantable condos due to investor concentration, litigation, or other factors. We have Non-QM programs designed specifically for these situations.
A non-warrantable condo is a condominium unit that does not meet the eligibility guidelines set by Fannie Mae or Freddie Mac. Because conventional loans are sold to these agencies after closing, if the condo project fails their review, no conventional financing can be used. This eliminates a large number of buyers and forces sellers to accept only cash offers, unless a Non-QM lender is involved.
As an independent broker, Kris has access to Non-QM lenders who specifically underwrite non-warrantable condo projects. These lenders perform their own condo project review and make lending decisions based on their own guidelines rather than agency requirements, opening up financing options that most buyers do not know exist.
What Makes a Condo Non-Warrantable?
More than 35% of units owned by investors
Single entity owns more than 10% of units in the project
Condo project has active or pending litigation
New construction project with less than 90% of units sold or under contract
Condo hotel or condotel projects with short-term rental restrictions
Projects with certain commercial space or structural concerns
Pros and Cons
Advantages
Finance condos that cash buyers dominate
Access properties excluded from conventional financing
Primary, second home, and investment property options
Competitive Non-QM pricing through wholesale lenders
No need to wait for condo project to achieve warrantable status
Things to Consider
Interest rates higher than conventional condo financing
Lender performs own condo project review, which takes additional time
Larger down payment typically required (10-20%)
Fewer lenders offer this product, making broker access critical
Resale may still be limited to cash or Non-QM buyers
Frequently Asked Questions
A condo is non-warrantable when it fails Fannie Mae or Freddie Mac guidelines. The most common reasons are more than 35% of units being investor-owned, a single entity owning more than 10% of the project, pending or active litigation involving the HOA, or a new construction project where less than 90% of units are sold.
Yes. Non-QM lenders offer mortgage programs specifically for non-warrantable condos. These lenders perform their own condo project review rather than using agency guidelines. Kris works with multiple wholesale Non-QM lenders who specialize in these programs across Texas.
Your lender or broker runs a condo project review to determine warrantability. Kris can typically determine this early in the process so you know whether conventional or Non-QM financing is required before you make an offer.
Yes, typically. The rate is slightly higher than conventional condo financing because the lender takes on additional risk and holds the loan rather than selling it to an agency. The premium varies significantly by lender, which is why Kris shops multiple sources to minimize your cost.
Some Non-QM lenders do offer financing for condotel projects, which are condo hotels that allow short-term rentals through a hotel program. These are among the most complex condo types to finance. Kris can assess whether a specific condotel project has financing options available.
