What Is a Non-Warrantable Condo?

Short answer

A non-warrantable condo is a unit in a building that does not meet Fannie Mae or Freddie Mac project eligibility rules, so a standard conforming loan is not available. Common reasons in Miami: too many rentals or investor-owned units, pending litigation, inadequate reserves, hotel-style operations, a required but incomplete milestone inspection, or unresolved structural repairs. Non-warrantable does not mean unfinanceable; it means you need the right lender.

Definition

Warrantable means the condo project can be 'warranted' to the agencies as meeting their guidelines. Non-warrantable projects are financed by portfolio banks, credit unions and non-QM lenders using their own standards.

Worked example

A Brickell building where 60 of 100 units are rented. Investor-owned share = 60 / 100 = 60%, which fails most agency tests for a second home or investment purchase. A buyer wants a $400,000 unit. Conventional path: unavailable. Non-warrantable path: suppose the lender requires 20% down instead of 10%, so $80,000 instead of $40,000, and prices the rate 0.75% higher. On a $320,000 loan over 30 years that is roughly $155 more a month. The buyer closes, and if the building later becomes warrantable, refinances into a conforming loan. Rates vary daily; this is an illustration.

Common reasons a condo is non-warrantable

• High investor or rental concentration, or one owner holding too many units.
• Pending litigation against the association, especially structural or construction defect cases.
• Reserves below the lender's threshold or a large unfunded special assessment.
• Hotel-type amenities, mandatory rental pools or short-term rental operations (condotel).
• Incomplete milestone inspection or SIRS, or identified structural deterioration.
• Commercial space above the allowed percentage, or the project still under developer control.
• New construction not yet complete or not enough units sold.

How to finance one

Non-warrantable programs typically ask for a larger down payment, strong credit and reserves, and price above conforming. Some lenders need only a limited questionnaire. Check the building before you write the offer: ask for the questionnaire answers, budget, milestone report and insurance. See non-warrantable condo loans and new construction condo loans.

In South Florida

After the 2021 Surfside collapse, Florida's SB 4-D milestone inspection and SIRS requirements gave lenders new reasons to flag buildings, and Fannie Mae and Freddie Mac now keep lists of projects they will not finance. Many Miami-Dade and Broward buildings from the 1970s and 1980s, especially along the coast, are on those lists or fail questionnaire review. Non-warrantable lending has become a core part of condo financing here, covering everything from Sunny Isles towers to small Coconut Grove buildings with fewer than five units.