Dan Green

Dan Green

Since 2003, Dan Green has been a leading mortgage lender and respected industry authority. His unwavering commitment to first-time home buyers and home buyer education has established him as a trusted voice among his colleagues, his peers, and the media. Dan founded Homebuyer.com to expand the American Dream of Homeownership to all who want it. .

Wrigleyville Condo Building - Warrantable Condo

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What is a Warrantable Condominium?

A warrantable condominium is a condo unit or building that meets specific financing and operations standards required for a government-backed mortgage loan approval.

A Longer Definition: Warrantable Condominium

A warrantable condo is a condo unit or building that meets financial and operational stability standards set forth by Fannie Mae and Freddie Mac, which render condo buyers eligible for conventional mortgage financing.

The corresponding terminology for a warrantable condo with FHA loans and VA loans is “approved project.” There is no analogous term with USDA mortgages because the USDA does not back mortgages linked to condos.

Condo warrantability benefits first-time home buyers because conventional mortgages can be low down payment mortgages and are competitively priced. By contrast, non-warrantable condos relegate buyers to portfolio mortgage products requiring larger down payments and higher interest rates.

For a condo to be classified as warrantable, it must present as low-risk, which means passing a series of risk assessment tests:

  1. The building ownership must not be concentrated with a few owners
  2. The building units must be mostly homeowner-occupied
  3. The building must have ample cash reserves
  4. The building must not be in safety or structural-based litigation

Building ownership

To be certified warrantable, no owner in a condo building may own more than 20 percent of the building, although, in some cases, that figure increases to 25 percent. When building ownership is spread out among many people, the probability of any one owner’s financial emergency remaining spreading to the building is low.

Occupancy types

Condo warrantability standards require a condo building to be majority owner-occupied as primary or second homes. Main residences are often better maintained than rental homes, which protects the value of each unit and the value of the complex.

Financial reserves

To be warrantable, a condominium’s homeowner’s association (HOA) must have at least 10 percent of its annual dues in a reserve fund for building maintenance and emergencies, and no more than 15 percent of its units can be 60 days past due on assessments.

Legal risk

Generally, a condo building cannot be deemed warrantable if the complex or its developer is involved in litigation. However, active or pending litigation does not automatically exclude condo buildings from warrantability – especially when the building is the plaintiff or the matter is unrelated to the building’s safety, structural soundness, and habitability.

Warrantable Condominium: A Real World Example

First-Time Home Buyer Stories: Warrantable Condominium

Imagine a first-time home buyer interested in buying a condo in a metropolitan area. They find a unit they love in a well-maintained condo building with excellent curb appeal.

As part of their mortgage pre-approval, the buyer learns about warrantable condos. Their buyer’s agent explains that this particular condo complex is deemed warrantable because most units are owner-occupied, the condo association has a healthy reserve fund, and there are no active or pending legal issues.

Consequently, the buyer secures a conventional mortgage with favorable terms and a low downpayment, making their dream of homeownership more affordable and accessible.

Common Questions About Warrantable Condominium

What makes a condo warrantable?

A condo is warrantable if it meets Fannie Mae’s or Freddie Mac’s warrantability criteria, including owner-occupancy rates, financial health of the condo association, limits on single-entity ownership, absence of litigation affecting the complex, and specific insurance requirements.

Why is warrantable status important for buyers?

The warrantable status of a condo impacts its financing options. Warrantable condos qualify for conventional loans with better terms, like lower interest rates and down payments, making them more accessible and financially favorable for buyers. Non-warrantable condos cannot use standard mortgage financing.

How do I know if a condo is warrantable?

You can find out if a condo is warrantable by asking your mortgage lender or buyer’s agent, who can access this information through the condo association, or by checking with Fannie Mae or Freddie Mac.

Can a non-warrantable condo become warrantable?

Yes, a non-warrantable condo can become warrantable if the condo association addresses the issues that disqualified it, such as improving financial reserves or resolving legal disputes.

Are warrantable condos more expensive?

Not necessarily. The price of a warrantable condo depends on the real estate market and the specific features of the unit and complex. However, warrantable condos might be more attractive to buyers due to better financing options, potentially affecting demand and pricing.


       A warrantable condominium is a condo unit or building that meets specific financing and operations standards required for a government-backed mortgage loan approval.

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