Apply now
Non-Warrantable Condo Lending Criteria: What You Need to Qualify

Non-Warrantable Condo Lending Criteria: What You Need to Qualify

March 08, 2024 by X2 Mortgage

In the realm of real estate financing, the term "non-warrantable condo" might sound like a red flag to some potential buyers, especially those familiar only with conventional mortgage options. However, understanding what it means and what it takes to qualify can open up a world of possibilities for those eyeing these properties. Let's delve into the lending criteria for non-warrantable condos and explore what prospective buyers need to qualify.

Understanding Non-Warrantable Condos

First things first, what exactly is a non-warrantable condo? Essentially, it refers to a condominium project that does not meet the eligibility requirements for conventional mortgage financing. These criteria are set by government-sponsored entities like Fannie Mae and Freddie Mac, as well as certain lenders. In the case of a conventional mortgage, lenders adhere to strict guidelines established by these entities to mitigate risk and ensure the quality of loans. Consequently, non-warrantable condos may fall outside these guidelines due to various factors such as the presence of commercial space, insufficient reserves, or pending litigation.

Factors Affecting Warrantability

One key factor affecting the warrantability of a condo is the presence of commercial space within the complex. If a substantial portion of the property is designated for commercial use, lenders may hesitate to provide residential financing. This is because commercial spaces can introduce additional complexities and risks, such as fluctuating income streams or zoning issues. Lenders prefer properties that are primarily residential in nature, as they pose fewer risks and are more aligned with traditional lending standards.


Another aspect that lenders scrutinize is the financial health and stability of the condo association. They assess factors such as the percentage of units owned by investors versus owner-occupants, the level of reserves held by the association, and any pending litigation or structural issues. A well-managed and financially sound condo association is more likely to meet lender requirements.

Qualifying for Financing

Now, let's discuss what it takes to qualify for financing when purchasing a non-warrantable condo. While these properties may present additional hurdles compared to warrantable condos, obtaining financing is certainly possible with the right approach.

1. Strong Credit Score

As with any mortgage application, having a strong credit score is crucial. Lenders typically look for a score of 620 or higher for conventional loans, but requirements may vary depending on the lender and other factors. A higher credit score can improve your chances of qualifying for financing and securing favorable terms.

2. Adequate Down Payment

Non-warrantable condos often require a larger down payment compared to warrantable condos. While the exact percentage may vary, be prepared to put down at least 10% to 20% of the purchase price. A larger down payment demonstrates your commitment to the property and reduces the lender's risk.

3. Stable Income and Employment History

Lenders want assurance that you have a stable source of income to afford mortgage payments. They typically look for a steady employment history and sufficient income to cover your housing expenses. Be prepared to provide documentation such as pay stubs, tax returns, and employment verification.

4. Working with Specialized Lenders

Given the unique nature of non-warrantable condos, working with specialized lenders who are experienced in financing these properties can be advantageous. These lenders understand the intricacies involved and may have more flexible lending criteria compared to traditional lenders.

5. Exploring Alternative Financing Options

In some cases, buyers may need to explore alternative financing options if they are unable to qualify for conventional mortgage financing. This could include options such as portfolio loans, which are held by the lender rather than sold on the secondary market. While these loans may come with higher interest rates or other terms, they can provide a viable solution for purchasing a non-warrantable condo.


While non-warrantable condos may pose additional challenges in terms of financing, they are not necessarily off-limits to prospective buyers. By understanding the lending criteria and taking proactive steps to qualify, you can successfully navigate the process of purchasing a non-warrantable condo. With the right approach and the assistance of experienced professionals, you can turn your dream of homeownership in a non-warrantable condo into a reality.


Do you know how much you can afford?

Most people don't... Find out in 10 minutes.

Get Pre-Approved Today!

Fast and Easy Custom Rate Quotes

Take the first step by getting pre-approved!

Get Loan Quote


Complete an Application in
Matter of Minutes

Get Started