🏢 What Is a Non-Warrantable Condo? | Fannie Mae vs. Freddie Mac Condo Guidelines Explained
Buying a condo? Learn what a non-warrantable condo is, why some condos are ineligible for conventional financing, and how Fannie Mae and Freddie Mac condo guidelines differ. Discover how to navigate HOA issues, investor ratios, and litigation concerns that impact condo loan approvals—and how Mojave River Mortgage can help you secure the right financing, even for non-conforming or portfolio-only condos.
Are you shopping for a condo and hearing terms like “non-warrantable,” “non-conforming,” or “limited financing available”? Don’t worry—you’re not alone. Condos come with a unique set of financing rules that most homebuyers (and even some Realtors) may not fully understand.
This guide explains:
✅ What a non-warrantable condominium is (and other terms lenders use)
🔍 How it affects your mortgage options
📜 How Fannie Mae vs. Freddie Mac condo guidelines compare
💼 How to get financing for condos with special lending requirements
🔑 What Is a Non-Warrantable Condo?
A non-warrantable condominium (also called a non-conforming condo, non-agency approved condo, or a condo requiring special portfolio financing) is a property that does not meet the lending criteria set by Fannie Mae and Freddie Mac.
When a condo isn’t eligible for conventional loans, buyers typically must turn to portfolio lenders, non-QM programs, or specialty financing.
🚫 Common Reasons a Condo Requires Special Financing
High Investor Ownership: More than 49% of the units are rentals.
Litigation: The HOA is involved in lawsuits (especially structural or safety-related).
Low Owner-Occupancy: Fewer than 50% of the units are primary residences.
Weak HOA Financials: The HOA isn’t setting aside at least 10% of its annual budget for reserves.
Single-Entity Ownership: One person or entity owns more than 2 units in small complexes or 20% in larger developments.
Short-Term Rental Model: Operates like a hotel or allows nightly Airbnb/VRBO rentals.
Ongoing Construction: The project is not fully built or still under phased development.
📜 Fannie Mae vs. Freddie Mac: Condo Loan Guidelines
| Guideline | Fannie Mae | Freddie Mac |
|---|---|---|
| Owner-Occupancy Requirement | Minimum 50% | Minimum 50% |
| Single-Entity Ownership Cap | 2 units (≤5 units) OR 20% | Same |
| HOA Reserve Requirement | 10% of budget | 10% (reserve study sometimes allowed as an alternative) |
| HOA Delinquency Cap | Max 15% delinquent | Same |
| Litigation Restrictions | No major structural or safety-related litigation | Slightly more flexible with non-safety disputes |
| Commercial Space Cap | 35% | 35% |
👉 Key Difference: Freddie Mac may allow more flexibility if the HOA has a detailed reserve study showing financial health.
💡 Challenges With Non-Conforming Condos
🏦 Financing Obstacles Include:
❌ No conventional loans (Fannie/Freddie won’t approve)
🔒 Limited lender options—must use portfolio lenders or non-QM programs
💰 Larger down payments (typically 20–30%)
💲 Higher interest rates due to increased lender risk
📑 Extra scrutiny on HOA financials, insurance, and legal documents
🔧 How Mojave River Mortgage Helps
As a wholesale mortgage broker, we work with a wide network of lenders offering portfolio loans, specialized condo financing, and non-agency loan solutions.
✔️ We Offer:
Access to lenders who finance condos not eligible for conventional loans
Competitive rates for portfolio and non-conforming condo loans
Expert review of HOA docs upfront to identify risks
Solutions tailored to buyers in Victorville, Apple Valley, Hesperia, and throughout California
🤝 Buying a Condo? Let’s Check If It Qualifies.
If you’re not sure whether a property qualifies for conventional financing, let’s figure it out together.
📲 Call us at +1 (760) 713-6137
📧 Email: Bo@MojaveRiverMortgage.com
🚀 Apply online:Apply Now
At Mojave River Mortgage, when others say “no,” we work to find a way to say “yes.”
⭐ Frequently Asked Questions (FAQ)
➕ What’s the difference between a warrantable and non-warrantable condo?
A warrantable condo qualifies for Fannie Mae and Freddie Mac loans. A non-warrantable condo, also called a non-conforming condo, doesn’t meet their guidelines and requires specialized financing.
➕ Can I buy a non-agency approved condo with a low down payment?
Typically, no. Most lenders require 20%–30% down for condos not eligible for standard conventional financing.
➕ Is buying a non-warrantable condo risky?
Not necessarily. While financing is trickier, many non-warrantable condos are great investments. Just be prepared for resale or refinancing challenges in the future.
➕ Do FHA or VA loans work for non-warrantable condos?
No. FHA and VA require the condo project to be on their approved list. If it’s not, those loan types aren’t an option.
📌 Final Thoughts
Condos can be a fantastic option, but knowing whether a property qualifies for conventional financing upfront is critical. Properties classified as non-warrantable, non-conforming, or portfolio-only condos aren’t dead ends—they just require the right lender and the right broker.
If you're buying a condo in the Victor Valley or anywhere in California, contact Mojave River Mortgage for clear answers, fast approvals, and financing solutions when others can’t deliver.