Condo Financing
Fannie Mae Approved Condos: Warrantable Requirements and How to Check Eligibility
Fannie Mae Selling Guide B4-2.1
Fannie Mae Condo Eligibility
Condo Project Manager Tool
A condo must meet Fannie Mae’s warrantability standards before any conventional lender will approve a mortgage on it. Here is what those standards require and how to verify your building qualifies.
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Warrantability Basics
- Definition: A warrantable condo meets Fannie Mae’s financial, legal, and structural criteria for conventional financing
- Review types: Full Review is the primary path after Limited Review elimination in 2026
- Who decides: The lender conducts the review — there is no universal pre-approved list
- Action: Ask your lender to run the project through Condo Project Manager before making an offer
Key Financial Thresholds
- Reserves: Minimum 15% of annual budget allocated to reserves (increased from 10% in 2026)
- Delinquencies: No more than 15% of units can be 60+ days delinquent on HOA dues
- Commercial space: No more than 35% of total project square footage can be commercial
- Action: Request the HOA budget and reserve study from the management company
Insurance Requirements
- Master policy: Must cover replacement cost of all common elements and structures
- Deductible cap: Maximum $50,000 per unit effective July 2026
- Liability: Minimum $1 million general liability on the master policy
- Action: Verify the HOA insurance meets thresholds before your appraisal is ordered
Deal-Killing Issues
- Litigation: Active litigation against the HOA for structural defects or financial mismanagement
- Single-entity ownership: One entity owning more than 25% of total units (with exceptions)
- Right of first refusal: HOA right to purchase units before third parties at below market value
- Action: Review HOA meeting minutes for pending lawsuits or special assessments
Frequently Asked Questions
Is there a list of Fannie Mae approved condos?
What happens if a condo is not warrantable?
Can a previously approved condo lose its warrantable status?
The Bottom Line Up Front
A condo must be warrantable — meaning it meets Fannie Mae’s project standards for reserves, insurance, ownership concentration, and legal standing — before any conventional lender will issue a mortgage on a unit in that building. The 2026 rule changes raise the reserve floor to 15% and eliminate Limited Review, making full financial documentation mandatory for all condo projects.
The practical impact is that more condo projects will fail warrantability checks in 2026 than in previous years. HOAs that relied on minimal reserves or skipped reserve studies are now non-warrantable by default. Buyers shopping condos must verify warrantability before making an offer or risk losing their earnest money when financing falls through.
- Reserve minimum increased from 10% to 15% of annual HOA budget — projects below this threshold are automatically non-warrantable
- Limited Review eliminated effective August 2026 — all projects now require full documentation of HOA financials
- Investor concentration cap (50% limit) was retired in March 2026 — no longer a warrantability concern
- Insurance deductible cap set at $50,000 per unit effective July 2026 — HOAs with higher deductibles fail the insurance test
What Makes a Condo Warrantable for Fannie Mae?
Warrantability is Fannie Mae’s determination that a condo project is financially stable, legally sound, and structurally maintained at a level that protects the mortgage investment. A project must pass all criteria simultaneously — failing any single requirement makes the entire project non-warrantable.
| Category | Requirement | Threshold |
|---|---|---|
| Reserves | Budget allocation to capital reserves | Minimum 15% of annual budget (or per reserve study) |
| Delinquency | Units 60+ days past due on assessments | No more than 15% of total units |
| Commercial | Non-residential square footage | No more than 35% of total project |
| Insurance | Master policy coverage | Replacement cost, max $50,000 deductible per unit |
| Presale | Units sold in new projects | Minimum 50% of units closed to owner-occupants |
| Ownership | Single-entity concentration | No single entity owns more than 25% of units (exceptions apply) |
| Litigation | Pending lawsuits | No active structural defect or financial mismanagement claims |
| Control | HOA board transition | Board must have transitioned from developer to owners |
Approval Watchpoint
The reserve study requirement is the most common failure point in 2026. If the HOA does not have a reserve study completed within the last 3 years by a qualified independent professional, the lender must default to the 15% budget allocation test. Many older buildings with deferred maintenance will fail this threshold because they historically budgeted 5-8% for reserves.
How Do You Check If a Condo Is Fannie Mae Approved?
There is no public database where buyers can look up condo approval status. Fannie Mae’s Condo Project Manager (CPM) is a lender-only tool that checks whether a project has been previously reviewed. However, previous review does not guarantee current approval — the lender must verify current financials.
The most reliable approach is asking your loan officer to run the project through CPM and then request a full warrantability review before you submit an offer. This takes 3-7 business days and requires the HOA to provide documentation.
- Ask your loan officer to check Condo Project Manager for the specific condo address — they can see if other lenders have reviewed it recently
- Request the HOA questionnaire from the management company — this is the standard form lenders use to assess warrantability
- Review the HOA budget for reserve allocation percentage — do the math yourself before submitting an offer
- Check HOA meeting minutes for any pending litigation, special assessments, or deferred maintenance issues
What Changed for Condo Financing in 2026?
Fannie Mae Lender Letter 2026-03 introduced three major changes that went into effect between March and August 2026. These changes eliminated flexibility that existed for smaller and low-risk projects and raised the financial bar for all condo associations.
- Limited Review eliminated (August 3, 2026): Previously available for established projects with fewer than 5 units in the loan or purchase-money transactions — now all projects require Full Review documentation
- Reserve minimum raised to 15% (effective for applications after LL-2026-03 date): The prior 10% floor is replaced — HOAs must budget at least 15% of annual assessment income to capital reserves
- Investor concentration cap retired (March 18, 2026): The old 50% investor-owned limit no longer applies — a project can have any percentage of investor-owned units and remain warrantable
- Insurance deductible cap at $50,000 per unit (July 1, 2026): Master policies with per-occurrence deductibles above $50,000 assigned to individual units make the project non-warrantable
What Documents Does the HOA Need to Provide?
Your lender will send an HOA questionnaire to the management company requesting specific financial and legal documentation. The HOA or management company is required to complete this form for the loan to proceed. Some charge a fee ($100-$500) for providing it.
- Current annual operating budget showing line items for reserve contributions and total assessment income
- Reserve study completed within the last 3 years by an independent professional (or current funding level documentation)
- Master insurance declarations page showing coverage amounts, deductibles, and named insured
- Current delinquency report showing how many units are 60+ days past due on assessments
- Litigation disclosure stating any pending or anticipated lawsuits involving the association
- Ownership breakdown showing how many units are owner-occupied, investor-owned, and developer-held
What Are Your Options If the Condo Is Non-Warrantable?
If the condo fails Fannie Mae’s warrantability standards, conventional financing through Fannie Mae or Freddie Mac is not available. You still have financing options, but they come with higher rates and different terms.
- Portfolio loans: Banks or credit unions that hold loans in-house can finance non-warrantable condos at their own discretion — expect rates 0.5-1.5% higher than conventional
- Non-QM lenders: Specialty lenders offer non-warrantable condo programs with 10-20% down and rates 1-2% above market
- FHA approval: If the project has FHA approval (separate from Fannie Mae), you may qualify for FHA financing even if conventional is unavailable
- Cash purchase: Remove the financing contingency entirely — viable only if you have liquidity and accept the risk of a non-warrantable project
How Does Fannie Mae Condo Approval Differ from FHA?
Fannie Mae and FHA have completely separate approval processes. A condo approved for FHA may not be warrantable for conventional, and vice versa. FHA maintains an actual public searchable database of approved projects. Fannie Mae does not.
| Feature | Fannie Mae (Conventional) | FHA |
|---|---|---|
| Public database | No — lender-only CPM tool | Yes — HUD HECM/Condo search |
| Approval duration | Per-transaction review | 2-3 year approval period |
| Reserve requirement | 15% of annual budget | 10% of annual budget |
| Owner-occupancy | No minimum (investor cap retired) | 50% minimum owner-occupied |
| Delinquency cap | 15% of units at 60+ days | 15% of units at 60+ days |
| Transfer fees | Allowed (limited types) | Limited types allowed |
Deal Saver
If a condo fails Fannie Mae warrantability due to reserves but the project has an active FHA approval, pivot to FHA financing. FHA still requires only 10% reserve allocation. The tradeoff is lifetime mortgage insurance, but it keeps the deal alive when conventional financing falls through.
What Are Common Reasons Condos Fail Warrantability?
Most warrantability failures come from the HOA’s financial management, not the physical building. The most common failures in order of frequency are insufficient reserves, delinquent assessments, and insurance gaps.
- Reserves below 15%: HOAs that budget only 5-10% for reserves automatically fail — this is the number one reason for non-warrantability in 2026
- Delinquency above 15%: Buildings with more than 15% of units delinquent on dues indicate financial instability
- Insurance deductible too high: Florida and coastal condos frequently carry $100,000+ deductibles due to hurricane risk premiums — now a hard fail at $50,000
- Active litigation: Any pending lawsuit alleging structural defects, construction defects, or HOA financial mismanagement
- No reserve study: Without a professional reserve study from the last 3 years, the lender cannot verify adequate funding
The Bottom Line
Verify condo warrantability before making an offer — not after. The 2026 rule changes have raised the bar, and more projects will fail than in previous years. Have your loan officer run the project through Condo Project Manager and request the HOA questionnaire early in your home search.
The buyers who get burned are those who make an offer, pay for an appraisal, and then discover the building is non-warrantable. At that point you have lost $500-700 on the appraisal and potentially your earnest money if you waived the financing contingency. A five-minute conversation with your loan officer prevents this entirely.
Frequently Asked Questions
How long does a condo warrantability review take?
A full warrantability review typically takes 3-7 business days once the lender has all required documentation from the HOA. The delay is usually in getting the HOA or management company to return the questionnaire. Some management companies take 2-3 weeks, so request the documents as soon as you identify the property.
Does the 50% investor cap still apply?
No. Fannie Mae retired the 50% investor concentration limit effective March 18, 2026 via Lender Letter 2026-03. A project can now have any percentage of investor-owned units and remain warrantable for conventional financing. This was one of the most requested changes from the real estate industry.
Can a condo HOA fix warrantability issues?
Yes. Most warrantability failures are fixable. The HOA can increase reserve contributions in the next budget cycle, collect on delinquent accounts, increase insurance coverage, or settle pending litigation. The fix timeline depends on the issue — budget changes take effect at the next fiscal year, while litigation can take years to resolve.
Do townhomes need warrantability approval?
Townhomes classified as PUDs (Planned Unit Developments) do not go through condo project review. They are treated like single-family homes for financing purposes even if they share walls. However, townhomes legally structured as condominiums (where you own airspace rather than land) do require full condo project review.
What is the difference between warrantable and non-warrantable?
A warrantable condo meets all of Fannie Mae’s project standards and qualifies for conventional mortgage financing at standard rates. A non-warrantable condo fails one or more standards and cannot be financed through Fannie Mae or Freddie Mac — it requires portfolio lending or non-QM products at higher rates.
Does Freddie Mac have different condo rules than Fannie Mae?
Freddie Mac’s condo requirements are substantially similar to Fannie Mae’s but not identical. Both raised reserve minimums and eliminated limited review paths in 2026. The practical differences are minor for most buyers. Your lender will determine which investor’s guidelines apply based on which entity they plan to sell the loan to.
Can I get a VA loan on a non-warrantable condo?
VA has its own condo approval process separate from Fannie Mae. A condo that is non-warrantable for conventional may still have VA approval. Check the VA’s approved condo list at the VA website. VA approval lasts indefinitely once granted and has different financial thresholds than Fannie Mae warrantability.
What happens to my existing mortgage if my condo becomes non-warrantable?
Nothing. Warrantability status only matters at origination — when a new mortgage is being issued. Your existing mortgage is unaffected if the project loses warrantable status after your loan closed. However, non-warrantability may affect your ability to refinance or the resale value of your unit.