Mortgage Glossary
Non-Warrantable Condo
A condominium project that doesn’t meet Fannie Mae or Freddie Mac warrantability criteria — financeable by non-QM investor lenders.
What is a non-warrantable condo?
“Warrantability” is mortgage shorthand for a condominium project that meets Fannie Mae and Freddie Mac (the government-sponsored entities, or GSEs) guidelines. The GSEs purchase the vast majority of conventional U.S. mortgages, so any condo a conventional bank will lend on must pass their condo-project review.
A non-warrantable condo fails one or more of these tests. The most common triggers are:
- Investor concentration > 50% — more than half the units are non-owner-occupied
- Commercial space > 25% of total building area
- Single-entity ownership > 10% — one party owns more than 10% of the units
- Pending HOA litigation — the association is in active lawsuit
- Inadequate HOA reserves or undisclosed special assessments
- Short-term / transient rental operations
A perfectly nice building with healthy financials and great management can still be non-warrantable simply because most of the owners are investors. That doesn’t make it a bad investment — it just means a different lender is needed.
How non-warrantable condos apply at Total Quality Lending
Total Quality Lending’s DSCR program is built for investor lending and explicitly accepts non-warrantable condos. TQL maintains its own condo overlay (not Fannie’s) that allows:
- High investor-ratio buildings
- Mixed-use buildings with significant commercial space
- Single-entity ownership above conventional thresholds
- Buildings with active short-term rental programs
TQL’s in-house Condo-Doc Department guarantees a 7-day review for a flat borrower fee. Required documents include the HOA budget, master insurance certificate, project questionnaire, and (for new construction) the public offering statement. Condotels are a specific subset of non-warrantable condos handled under their own LTV grid.
FAQs
What makes a condo non-warrantable?
Common triggers: investor (non-owner-occupied) ownership above 50%, commercial space above 25% of the building, single-entity ownership of more than 10% of units, pending litigation involving the HOA, inadequate HOA reserves, or short-term/transient rental operations. Any one of these can make Fannie Mae and Freddie Mac decline the project.
Can I still get a mortgage on a non-warrantable condo?
Yes. Conventional Fannie/Freddie loans won't finance non-warrantable condos, but Total Quality Lending's DSCR program accepts them. TQL's in-house condo-doc team reviews HOA documents to confirm the project meets TQL's overlay (not Fannie's), which is much more permissive on investor concentration, commercial space, and single-entity ownership.
Why do investor condos often end up non-warrantable?
Investor-heavy condo buildings frequently have 60–80% non-owner-occupants — automatically over the 50% Fannie cap. Many also have short-term rental programs (which Fannie disallows) and high-investor HOAs. This is exactly the niche where DSCR lending exists.
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