Warrantable vs Non-Warrantable Condo — Which One Should You Get?

With the housing market in recovery and condo values going up, condominiums are attractive prospects for both first-time and experienced home buyers.

One of the most important considerations when buying property in a condominium development or planned unit development is whether it’s warrantable or non-warrantable.

Allow our expert team to shed some differences between the two in this guide.

What is a Warrantable Condo?

Warrantable condos are those that meet the minimum standards set by the federal-backed entities Fannie Mae and Freddie Mac.

These are some of the major criteria that condo associations have to meet in order to be considered warrantable:

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-At least 10% of the annual budget goes into a capital reserve fund for building maintenance and foundation repairs. 

-At least 50% of the condo units must be owner-occupied.

-Less than 15% of the condo unit owners have any delinquency on their association dues.

-Less than 25% of the condo development is used for commercial or non-residential purposes.

-No more than 10% of the condo units in the entire development are owned by a single person or entity, including the developer.

-The condo homeowners association (HOA) is not a party to any lawsuit.

What Is a Non-Warrantable Condo?

Non-warrantable condos are those that do not meet the two group’s minimum standards.

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Even if it only fails to meet one guideline on the list, the condo is automatically considered non-warrantable.  Further on in this article, we detail some of the factors that make condo projects non-warrantable.   

Warrantable vs Non-Warrantable Condo Financing

Condofinancing isn’t quite as straightforward as financing for a single-family home.

For starters, condominium developments are riskier investments than single-family homes. The reason behind this is because lenders are concerned not just with individual owners’ solvency, but also the financial and physical health of the entire property. 

Before buying a condo, you should check with a real estate agent about the warrantability (or not) of your desired property. 

Warrantable Condominium Financing

It’s easier to obtain mortgage financing for warrantable condos because they’re considered lower-risk investments.

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A warrantable condo loan meets the standards set by government-backed financial entities, such as Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).

This type of loan can be sold back to them. Because of this level of security, banks and mortgage lenders are more willing to give you lower interest rates. 

Non-Warrantable Condominium Financing

Non-warrantable condos are harder to obtain mortgage financing for because they are considered riskier investments.

A non-warrantable condo mortgage is one that does not meet Fannie Mae and Freddie Mac-approved standards, so it cannot be sold back to them.

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Because of this added risk, major banks and mortgage lenders tend to not approve condo loans for non-warrantable properties.

You may want to seek out a smaller or mid-size bank or mortgage lender that offers portfolio loans. A portfolio loan is one that’s not sold to other financial entities, thereby carrying its own level of risk.

To manage that, portfolio loans may require higher down payments or offer higher mortgage rates than a conventional loan. In short: you’ll spend more with a portfolio loan.

Read more: Condominium vs co-operative real estate 


Is it bad to buy a non-warrantable condo?

No, it’s not bad. There are some situations where non-warrantable condominiums are considered assets. For example, if you rent your unit out, you can make it pay for itself. 

However, if the specific condo you want to buy is non-warrantable, the previous section lists some of the difficulties in obtaining financing for this type of property.   

What makes a condo non-warrantable?

As stated above, non-warrantable condos are any properties that don’t meet Fannie Mae- and Freddie Mac-approved guidelines.

A condominium property is considered as non-warrantable if the following factors is applicable: 


Based on the information above, our team suggests buying a warrantable condo if you’re looking for a place to settle down and maybe start a family. If you also don’t want to deal with extensive property maintenance, this type of condo might suit you better.

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Tal Shelef
Tal Shelef is a know it all when it comes to pre-construction developments Canada Wide. His years of daily research and growing up on construction sites / seeing development sites grow from the ground up at an early age gave him a passion like no other. He uses his knowledge to educate Condowizard’s clients. Have a conversation with Tal and see how much value one phone call may provide you.

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