Non-Warrantable Condos: What the New 2026 Rules Mean for Buyers

Some buyers get denied conventional financing not because of anything on their own application, but because of the building itself. This is what it means for a condo to be non-warrantable, and new 2026 rules from Fannie Mae and Freddie Mac just made this a bigger issue for more buyers than it used to be.

A warrantable condo meets Fannie Mae and Freddie Mac’s project standards, which means conventional lenders can sell the loan to them on the secondary market. A non-warrantable condo fails one or more of those standards. This means conventional financing through Fannie Mae or Freddie Mac is not available for any unit in that building, regardless of how strong an individual buyer’s own credit or income looks.

This is the detail that surprises people most: warrantability is assessed at the building level, not the borrower level. A buyer with excellent credit and a large down payment can still be blocked from conventional financing. This can happen simply because the condo association’s finances or insurance do not meet current standards

Fannie Mae and Freddie Mac announced several condo project and property insurance updates on March 18, 2026. These changes have different effective dates, and the two agencies use different names for some review paths.

Fannie Mae

The 15% reserve requirement has been announced but is not yet in effect. Fannie Mae is increasing the minimum replacement-reserve allocation from 10% to 15% of annual budgeted assessment income. The higher requirement applies when the Full Review process is used for loan applications dated on or after January 4, 2027. Until then, an HOA should not be described as failing Fannie Mae’s 15% requirement solely because its current budget has not reached that threshold.

Fannie Mae’s enhanced reserve-study requirements have an earlier effective date. For loan applications dated on or after August 3, 2026, when a reserve study is used to demonstrate adequate reserves, the project budget must include the highest recommended reserve allocation in the study. That allocation cannot rely on a baseline funding method.

Limited Review was retired for applications dated on or after August 3, 2026. Projects that previously qualified for Limited Review must instead use Full Review or, when eligible, Waiver of Project Review. This does not mean every condo project with more than ten units automatically requires Full Review, because the appropriate review path still depends on the project and transaction.

The investment-property concentration limit was retired. Fannie Mae eliminated its 50% investment-property concentration limit for established projects reviewed under the Full Review option. The separate presale requirement for new and newly converted projects still applies.

Freddie Mac

Freddie Mac’s 15% reserve requirement also has not taken effect yet. Freddie Mac is increasing the minimum reserve allocation from 10% to 15% of annual budgeted assessment income for mortgages with Application Received Dates on or after January 4, 2027.

Its enhanced reserve-study requirements apply earlier. For mortgages with Application Received Dates on or after August 3, 2026, the project budget must include the highest recommended reserve allocation in the reserve study and cannot use a baseline funding method.

Streamlined Review was retired for mortgages with Application Received Dates on or after August 3, 2026. Eligible projects may instead use the Established Condominium Projects review, Reciprocal Review, or Exempt from Review path.

The owner-occupancy requirement was retired. Freddie Mac separately eliminated its 50% owner-occupancy requirement for Established Condominium Projects. Presale requirements for New Condominium Projects remain in place.

Property Insurance Deductible

For Fannie Mae loan applications dated on or after July 1, 2026, and Freddie Mac mortgages with Application Received Dates on or after July 1, 2026, a per-unit deductible under the master property insurance policy generally cannot exceed $50,000 per unit.

Industry analysts following these changes generally group the requirements into six categories, sometimes called a warrantability checklist. These are reserve funding, delinquency rates, single-entity ownership concentration, presale requirements for new projects, insurance coverage, and the amount of commercial space in the building. Failing any one of these can make the entire building non-warrantable. This affects every unit owner, not just one buyer’s transaction.

If the building you are buying into does not meet these standards, that matters immediately. A standard conventional mortgage from a Fannie Mae or Freddie Mac lender is not available for any unit in that building. Your realistic options generally narrow to a few paths.

Portfolio loans, where a bank holds the loan on its own books rather than selling it, sometimes offer financing for non-warrantable condos, typically with stricter terms.

Non-QM financing is another common route, generally coming with a higher interest rate and a larger down payment requirement than a warrantable condo would need.

Paying cash avoids the issue entirely, though this is not realistic for most buyers.

Waiting for the building to resolve its warrantability issues is sometimes possible. An example is an HOA rebuilding its reserves to the required level. Timelines vary and are outside any individual buyer’s control.

Non-warrantable financing typically involves a lower maximum loan-to-value, often somewhere in the 70% to 80% range. It also generally carries a higher rate than a comparable warrantable condo loan would have. Some non-QM programs also exclude certain building types entirely, such as condo-hotels or buildings with a high concentration of short-term rentals. Terms should always be confirmed with a specific lender rather than assumed.

Warrantability is reassessed at the time of each new loan application, not locked in permanently once a building is approved. A condo that was warrantable for a buyer six months ago can lose that status. This can happen if the HOA’s reserves drop, delinquency rates rise, or new litigation is filed against the association. A building’s status can change between when you tour a unit and when you are ready to close. This is part of why it is worth checking specifically, rather than assuming a building qualifies simply because a similar unit sold there recently under different financing.

FHA and VA loans follow their own separate condo approval process. They are not directly affected by these Fannie Mae and Freddie Mac changes. This is worth knowing if a specific building’s warrantability becomes a concern during your search.

Ask your real estate agent or the HOA directly for the association’s most recent reserve study and budget before writing an offer. A loan officer can also help confirm a building’s current warrantable status with a specific lender before you get too far into the process. Catching a warrantability issue before you write an offer is far less stressful than discovering it after you are already under contract.

What makes a condo non-warrantable?

A condo may be considered non-warrantable for a particular conventional loan when the project does not satisfy the applicable Fannie Mae, Freddie Mac, lender, or investor requirements. Relevant factors may include reserve funding, HOA delinquencies, ownership concentration, presale requirements, insurance coverage, critical repairs, litigation, special assessments, and commercial space.

Is the new 15% reserve requirement already in effect?

No. Fannie Mae and Freddie Mac announced the increase from 10% to 15%, but the higher requirement applies to loan applications dated or received on or after January 4, 2027.

For Fannie Mae, the 15% requirement applies when the Full Review process is used. Freddie Mac applies its corresponding requirement under its applicable project review guidelines.

The enhanced reserve-study requirements have a different effective date and apply to applications dated or received on or after August 3, 2026.

Was Limited Review eliminated immediately?

No. Fannie Mae retired Limited Review for loan applications dated on or after August 3, 2026. Freddie Mac separately retired its Streamlined Review path for mortgages with Application Received Dates on or after August 3, 2026.

The available replacement paths differ between the agencies. Not every condo project automatically requires a Fannie Mae Full Review.

When did the $50,000 per-unit deductible requirement take effect?

For Fannie Mae loan applications dated on or after July 1, 2026, and Freddie Mac mortgages with Application Received Dates on or after July 1, 2026, a per-unit deductible under the master property insurance policy generally cannot exceed $50,000 per unit.

Can I still get financing on a non-warrantable condo?

Potential options may include portfolio loans, non-QM financing, or paying cash. Availability, interest rates, down payment requirements, and project restrictions vary by lender and program.

Did the 2026 updates make condo financing harder or easier?

It depends on the project and application date. The retirement of Fannie Mae Limited Review and Freddie Mac Streamlined Review, the enhanced reserve-study standards, and the insurance requirements may create additional review issues for some projects. The 15% reserve requirement does not apply until January 4, 2027. Separately, the retirement of certain Fannie Mae investment-property concentration and Freddie Mac owner-occupancy requirements may help some projects qualify.

Can a warrantable condo become non-warrantable later?

Yes. A previous approval or successful closing does not guarantee eligibility for a new transaction. Project conditions and applicable guidelines may change, so eligibility must be confirmed for the new application.

Do FHA and VA loans use the same condo rules as Fannie Mae and Freddie Mac?

No. FHA and VA maintain separate condo project approval processes. These Fannie Mae and Freddie Mac updates do not replace FHA or VA requirements.

This article is for educational purposes only and is not a commitment to lend. Condo warrantability rules are complex, vary by lender, and can change over time. Confirm a specific building’s current status with a loan officer before making an offer.

Next Steps

If you are considering a condo purchase, Wonder Rates can help check a building’s warrantable status. We can also walk through financing options if the building does not currently qualify for conventional financing.

[Talk to a loan officer about condo financing →]

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Duc Pham, Mortgage Broker | NMLS# 844897
Wonder Rates, Inc. | NMLS# 1518655
Equal Housing Lender.
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This article is for educational purposes only and is not a commitment to lend. Loan approval is subject to creditworthiness, income verification, property eligibility, and current underwriting guidelines. Loan programs, interest rates, and lender fees may change without notice. Always review your official Loan Estimate before making a financing decision.