A non-warrantable condo is one in a project that fails Fannie Mae's or Freddie Mac's rules, so a normal conventional loan will not touch it. In Florida, the new condo safety laws have pushed a lot of older coastal buildings into that bucket. You can still buy these units. You just need the right loan. Here is exactly how it works.
A condo is "warrantable" when its project meets the eligibility rules set by Fannie Mae and Freddie Mac. Those two buy most conventional loans in the country. When a project meets the rules, a lender can sell the loan to them, so the borrower gets a normal conventional rate and terms.
A non-warrantable condo is the opposite. The project fails at least one rule, so the loan cannot be sold to Fannie or Freddie. Most conventional lenders then decline it, because they have nowhere to sell the loan. Here is the part buyers miss: the unit can be flawless. New kitchen, water view, perfect inspection. The problem lives at the building or association level, not in your four walls. It is the project's finances, ownership mix, insurance, or legal status that fails, and your unit gets caught in it.
That distinction matters because it changes the fix. You do not renovate your way out of non-warrantable status. You either wait for the association to clear the issue, or you use a loan that does not care about the agency rule that failed.
This is mostly a Florida story, and it traces back to the 2021 Surfside collapse. After that tragedy, the state passed a chain of condo safety laws: SB 4-D in 2022, SB 154 in 2023, HB 1021 in 2024, and HB 913 in 2025. Together they force older buildings to inspect their structure and actually fund the reserves to fix what the inspection finds.
Two requirements drive most of the trouble:
The fallout is what creates non-warrantable status. A building gets its inspection back, finds deferred repairs, and levies a big special assessment. Reserves that were skinny for years now have to be filled fast. Sometimes there is litigation between owners and the board over who pays. Each of those, a special assessment, an underfunded reserve, deferred structural repairs, active litigation, can fail a Fannie Mae project review on its own. That is why a building that financed fine in 2020 may be non-warrantable today.
A project has to pass every one of these to stay warrantable. Fail one and the whole project is non-warrantable. These reflect Fannie Mae's current standards heading into 2026 and 2027.
| Rule | The threshold that fails it |
|---|---|
| Owner-occupancy | For an investment-property purchase, fewer than 50% of units are owner-occupied. Primary residence and second-home buyers are not held to this ratio in an established project. |
| Single-entity ownership | One person or company owns more than 20% of the units in a project of 21 units or more (tighter limits apply to small projects). |
| HOA delinquency | 15% or more of units are 60+ days behind on association dues. |
| Reserves | The budget puts less than 10% toward reserves. That minimum rises to 15% for loan applications dated on or after January 4, 2027. |
| Commercial space | More than 35% of the project's floor area is commercial or non-residential. |
| Master insurance | No replacement-cost master policy. Effective July 1, 2026, the per-unit deductible is capped at $50,000. |
| Litigation | Active lawsuits involving safety, structure, or the association's funds. Minor non-structural suits may be allowed. |
| Presale (new construction) | Fewer than 50% of units sold or under contract in a new or newly converted project. |
| Condition / safety | A milestone inspection or reserve study showing deferred maintenance, unsafe findings, or "critical repairs" that are not funded and scheduled. |
One more change worth knowing: Fannie Mae is retiring its quicker "Limited Review" path on August 3, 2026. That was the shortcut used on a lot of low-down-payment condo loans. After that date more condo loans run through a Full Review, which means the project's documents get examined harder. Expect more deals to surface a warrantability problem that a Limited Review would have skipped.
For reference, the 2026 baseline conforming loan limit in Florida is $832,750, and Monroe County (the Keys) sits at $990,150. Cross those and you are also into jumbo territory, where condo project rules still apply on top of the larger loan size.
The answer is a portfolio loan. A portfolio lender keeps the loan on its own books instead of selling it to Fannie Mae, so it gets to write its own condo rules. That is the whole game. The agency rule that killed your conventional approval simply does not apply.
Portfolio and Non-QM programs can work around the most common Florida fails:
For investors, a DSCR loan can be the cleaner path. DSCR qualifies on the property's rent, not your tax returns, and many DSCR lenders are flexible on condo project rules. If the unit is a short-term rental in a coastal building, that is often the right tool.
Cash is the other option, and some buyers pay cash now and refinance later once the building clears its issue and becomes warrantable again. That is a real strategy, not a fallback. The trick is making sure the issue is actually fixable on a timeline you can live with.
More than a conventional loan, but less than most people fear. A few honest ranges:
Roughly 0.5% to 1.5% above a comparable warrantable loan. A litigation-only fail prices near the low end. A building with structural findings prices higher.
Commonly 10% to 25% minimum. Investment and condotel files sit at the higher end. Strong credit and reserves pull it down.
Lenders often want several months of PITI in the bank after closing. The riskier the project, the more they ask for.
Most portfolio condo programs start around a 680 score, with the best pricing above 720.
The single biggest pricing driver is why the condo failed. A great building with one fixable issue is a very different loan than a building with open structural repairs and no money to do them. The first is a pricing conversation. The second is a buyer-beware conversation, and I will tell you that straight.
This is the step that saves deposits. Get the project documents reviewed before you write the offer, not after you are under contract. Ask the listing agent or the association for:
Send those to a lender who actually reads them. I run this review on coastal Florida condos every week and can usually tell you within a day whether a building is warrantable, why it failed if it did, and which loan fits. Doing it up front means you write your offer with the right financing already lined up, instead of finding out in week three that the deal will not close.
Run the address through the Coastal Risk Score for a fast read on flood, insurance, and coastal exposure, then send me the condo docs for a warrantability check.
Can you get a mortgage on a non-warrantable condo in Florida?
Yes. The loan moves from agency financing to a portfolio or Non-QM program. A portfolio lender keeps the loan in-house and sets its own condo rules, so it can approve files that Fannie Mae rejects for occupancy, single-entity ownership, litigation, or reserves.
Does an FHA or VA loan work on a non-warrantable condo?
Usually no. FHA and VA need the project on their own approved list, a separate and often stricter standard. If a condo is non-warrantable for conventional, it is rarely FHA or VA approved either, so portfolio or Non-QM financing is the practical route.
Will a non-warrantable condo become warrantable again?
Often, yes. Many fails are temporary. Litigation settles, a developer sells down its block of units, reserves get rebuilt after a SIRS. Once the issue clears, the project can pass review again, and an owner can refinance into a conventional loan at that point.
Is a non-warrantable condo a bad investment?
Not by default. Some of the best-priced units in solid coastal buildings are non-warrantable only because of one fixable issue. The discount is real, and the value can climb once the building clears it. The risk is buying into a building whose problem is structural and unfunded, which is why the document review matters so much.
What is a condotel, and why is it almost always non-warrantable?
A condotel is a condo that operates like a hotel, with a front desk, daily rentals, and a rental management program. Those features fail agency rules, so condotels run on portfolio loans, typically with larger down payments. Many coastal Florida resort buildings fall in this category.
How does a special assessment affect financing?
A special assessment by itself does not always make a condo non-warrantable, but a large or open one tied to structural repairs can. Lenders want to see the assessment funded and the repair scheduled. An unfunded "critical repair" finding is the version that stops a conventional loan.
Coastal Florida specialist closing condo, jumbo, DSCR, and portfolio deals across the Florida Keys, Naples, Sarasota, and Palm Beach. If a building is non-warrantable, I will tell you why and whether it is worth it. Licensed in Florida.
Send me the condo docs and the address. I will tell you if the building is warrantable, why if it is not, and the exact loan that closes it. 30 minutes.