Finding out whether a condo is non-warrantable is a five-minute conversation at intake or a four-week discovery in underwriting, and the difference is whether you thought to ask. The file that dies late is almost never killed by the borrower. It is killed by a reserve line item, a single owner who bought eleven units, or a lawsuit nobody mentioned.
The stakes went up this year. Fannie Mae retired its Limited Review process, and lenders must apply the change to all loan applications dated on or after August 3, 2026, per Lender Letter LL-2026-03. Established projects that used to clear on an abbreviated review now go through Full Review or a Waiver of Project Review. Freddie Mac eliminated its Streamlined Review pathway on the same timeline. Projects that were never examined closely are being examined closely for the first time.
That is a problem for brokers who treat warrantability as an underwriting discovery, and an opportunity for brokers who screen at intake. We lend on non-warrantable condos and condotels through our DSCR loan program and our condotel program, so a project that fails agency review is a product change in our shop rather than a dead deal. Submit the scenario as soon as you suspect a project problem.
What Changed in 2026 and Why It Matters at Intake
Three dates should be on every broker’s calendar.
August 3, 2026. Fannie Mae’s Limited Review is retired for all loan applications dated on or after this date. Established projects previously eligible for Limited Review must now be reviewed under Full Review or, where applicable, the Waiver of Project Review process.
August 5, 2026. The current version of Fannie Mae Selling Guide sections B4-2.1-02, B4-2.1-03, and the Full Review requirements took effect, carrying the thresholds listed below.
January 4, 2027. The minimum replacement reserve allocation rises from 10% to 15% of the association’s annual budgeted assessment income for Full Review files. Lenders must comply for all loan applications dated on or after that date.
The January change is the one worth flagging to borrowers now. A project that clears Full Review today at an 11% reserve allocation will not clear in January unless the association raises its budgeted reserve contribution. Associations move slowly. Brokers working condo-heavy markets should assume some currently warrantable projects will not be warrantable in the first quarter of 2027.
A Six-Question Screen for the First Call
You do not need documents to run this. You need the borrower on the phone and six questions.
Three Questions About the Building
Does the building have a front desk, a rental office, or a management company that rents units nightly? Projects operated as transient housing, hotels, or motels are ineligible under Fannie Mae’s ineligible projects list. So are projects with mandatory rental pooling arrangements. A borrower describing “the on-site rental program” has just told you this is a condotel conversation.
How many stories, and how old is the building? This matters everywhere and it matters enormously in Florida, where buildings of three or more habitable stories face milestone inspection and Structural Integrity Reserve Study requirements under Florida Statutes Chapters 553 and 718. A milestone inspection is triggered when a building reaches 30 years of age from its certificate of occupancy and repeats every ten years. Where deterioration is found, repairs must commence within 365 days.
Is any commercial space in the building, and roughly how much? Fannie Mae caps nonresidential or commercial space at 35% of total project space. Ground-floor retail in an urban mid-rise can quietly exceed that.
Two Questions About Money
Has there been a special assessment in the past 24 months, or is one being discussed? Special assessments are not automatically disqualifying, but they point directly at deferred maintenance. Under the ineligible projects criteria, unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months make a project ineligible.
What percentage of the annual budget goes to replacement reserves? This is the question borrowers cannot usually answer, which is itself informative. The threshold is 10% of annual budgeted assessment income now and 15% for applications dated on or after January 4, 2027.
One Question About Ownership
Does any single person, company, or entity own more than a couple of units? Single-entity ownership limits are strict. In projects with 5 to 20 total units, no single entity may own more than 2 units. In projects with 21 or more units, the cap is 20%. A developer who kept a block of units, or an investor who bought a floor, can render an entire project ineligible for conventional financing.
The Thresholds That Decide It
These are the current Fannie Mae figures, drawn from the Selling Guide sections effective August 5, 2026, and from Lender Letter LL-2026-03. Keep them where you can reach them on a call.
- HOA assessment delinquency: no more than 15% of total units may be 60 days or more past due on common expense assessments. The same 15% threshold applies separately to each special assessment.
- Replacement reserve allocation: at least 10% of the annual budgeted assessment income, rising to 15% for applications dated on or after January 4, 2027. A qualifying reserve study can substitute where it demonstrates equivalent financial protection.
- Single-entity ownership: maximum 2 units in projects with 5 to 20 units; maximum 20% in projects with 21 or more units.
- Commercial or nonresidential space: may not exceed 35% of total project space.
- Non-incidental business income: an HOA receiving more than 10% of its budgeted income from business operations makes the project ineligible.
- Critical repairs: unfunded repairs exceeding $10,000 per unit that should be undertaken within 12 months trigger ineligibility, as do material deficiencies, mold, water intrusion, and failed inspections.
- Master insurance deductible: the maximum per-unit deductible on a master property policy is $50,000 per occurrence.
- Categorically ineligible: hotel and motel operations, timeshares, houseboats, boat slips, segmented ownership, continuing care facilities, multi-dwelling units under a single deed, live-work projects that violate local zoning, projects in bankruptcy or dissolution, and pending litigation affecting safety, structural integrity, or habitability.
One clarification on litigation, since brokers get this wrong in both directions. Not all litigation is disqualifying. A project defending a routine slip-and-fall claim covered by insurance is in a different position from a project suing its developer over construction defects. The disqualifying category is litigation that touches safety, structural integrity, or habitability.
The Documents That Answer the Question
When the screen raises a flag, these six documents settle it, and you can request them before ordering an appraisal.
The HOA questionnaire. The primary instrument. Incomplete questionnaires are themselves a warning sign, because associations that will not answer questions usually have answers they do not like.
The current annual budget. This is where you calculate the reserve percentage yourself rather than taking anyone’s word for it. Divide the annual budgeted replacement reserve allocation by the annual budgeted assessment income.
Twelve months of board meeting minutes. Minutes are the most underused document in condo lending. Special assessments, litigation, insurance problems, and failed inspections appear in minutes months before they appear on a questionnaire.
The master insurance declarations page. Check the per-unit deductible against the $50,000 cap and confirm the coverage type matches the project.
The reserve study, where one exists. In Florida, ask specifically for the Structural Integrity Reserve Study and the milestone inspection report. A SIRS is a visual inspection performed by a qualified professional and must be repeated every ten years.
A written litigation disclosure. Get it in writing and get it specific. “No litigation” from a property manager who has not checked with counsel is not a disclosure.
CPM “Unavailable” and Why You Cannot Look It Up Yourself
Fannie Mae maintains project status in Condo Project Manager, and a status of “Unavailable” blocks the project from conventional financing. A Waiver of Project Review is not available for a project carrying that status.
CPM is not a public database. Access requires lender registration through Fannie Mae’s Technology Manager platform, which means brokers cannot query it directly and neither can borrowers. Any lender working with Fannie Mae can search a project by name and address, so the practical move is to ask a lending partner to run the check rather than searching for a list that is not published. Freddie Mac runs a parallel process through Condo Project Advisor, and a project can be treated differently by the two agencies.
This is also why the informal advice circulating among agents, that owners should “check the blacklist,” is unhelpful. There is no consumer-facing lookup. The check happens through a lender or not at all.
What to Do With the Answer, and When to Call Us
A non-warrantable finding changes the product, not the outcome. That reframe is worth making explicitly with the borrower and the referring agent, because both of them have usually been told the condo is unfinanceable.
For investor files, our DSCR program accepts non-warrantable condos and allows title in an LLC, with loan amounts up to $3 million on one to four unit properties. For condotel units, we lend up to $3 million with up to 75% LTV on purchases, 70% on rate-and-term refinances, and 65% on cash-out refinances. Building eligibility for condotels turns on three things: no mandatory rental pooling, no timeshare component, and a full kitchen in the unit.
The Waiver of Project Review is also worth understanding, since it survived the August changes and covers more ground than brokers expect. It applies to detached condo units, all two- to four-unit projects, five- to ten-unit projects that are not part of a larger development or master association, and Fannie Mae to Fannie Mae limited cash-out refinances up to 80% LTV on condo units. Property eligibility, appraisal, and insurance requirements still apply, and the project still cannot carry an Unavailable CPM status.
The pattern worth building is simple. Run the six questions on the first call. Request the budget and twelve months of minutes before you order anything. Calculate the reserve percentage yourself. If any of it points toward a project problem, submit your scenario and let us tell you whether the file works on a non-QM structure before the borrower has spent money on third-party reports.
Roughly 40% of the loans we do involve some form of exception, against an industry average under 10%, and condo project issues are among the most common reasons a file reaches us. Not yet working with us? Become an approved broker.
Frequently Asked Questions
How can a broker check if a condo is non-warrantable?
The definitive check is a Fannie Mae Condo Project Manager lookup, which requires lender access through Fannie Mae’s Technology Manager platform and cannot be run by a broker or a borrower directly. Before that, a broker can screen the project by reviewing the HOA questionnaire, the annual budget, twelve months of board meeting minutes, and the master insurance declarations page against the current thresholds.
What makes a condo non-warrantable in 2026?
The most common causes are inadequate replacement reserves, HOA delinquencies above 15% of units at 60 or more days past due, single-entity ownership above 2 units in small projects or 20% in projects of 21 or more units, commercial space exceeding 35% of the project, unfunded critical repairs over $10,000 per unit, hotel-like operations or mandatory rental pooling, and pending litigation affecting safety or habitability.
Did Fannie Mae really eliminate Limited Review?
Yes. Under Lender Letter LL-2026-03, lenders must apply the retirement of Limited Review to all loan applications dated on or after August 3, 2026. Established projects that previously qualified for Limited Review now require Full Review or a Waiver of Project Review, and Freddie Mac retired its Streamlined Review pathway on the same schedule.
Can you get a mortgage on a non-warrantable condo?
Yes, through non-QM financing rather than conventional agency loans. We lend on non-warrantable condos and condotels, including for investors qualifying on property cash flow through a DSCR loan with title held in an LLC. The project characteristics that disqualify a unit from agency financing are underwritten rather than treated as automatic declines.
What is the difference between a non-warrantable condo and a condotel?
A non-warrantable condo is any condo project that fails agency eligibility for any reason, from thin reserves to litigation. A condotel is a specific subtype: a condo project operated with hotel-like characteristics such as a front desk, nightly rentals, or on-site hospitality management. All condotels are non-warrantable, but most non-warrantable condos are not condotels.
Does a special assessment automatically make a condo non-warrantable?
No. A special assessment on its own is not disqualifying, and many projects assess for planned improvements while remaining fully eligible. What matters is whether the assessment reflects unfunded critical repairs, whether more than 15% of units are 60 or more days delinquent on it, and whether the underlying condition affects safety, structural integrity, or habitability.
