What does non-warrantable mean?
It generally means the condo project does not satisfy the applicable Fannie Mae or Freddie Mac project requirements. That is a separate question from whether you have enough income, good credit or a down payment.
The lender reviews both you and the project. An attractive unit in a well-kept building can still run into an association, insurance or legal issue. A borrower pre-approval is not a condo-project approval.
Fannie Mae: project review and documentation
Non-warrantable describes the property’s eligibility. Non-QM describes a loan category. They are not synonyms. A lender may have a non-QM or portfolio option for a particular project, but accepting non-QM loans does not mean accepting every condo.
Published lender examples illustrate selected program limits. They are not loan offers or confirmation of channel availability for your file.
What can make a condo non-warrantable?
| Issue | What the lender checks |
|---|---|
| Ownership or commercial-use concentration | One owner may control too many units, or the project may have too much commercial space for the applicable review. The threshold and exceptions depend on the project. |
| Construction, project finances or legal restrictions | Incomplete common areas, insufficient reserves, overdue dues, litigation or restrictions on the lender’s rights can require further review or make the project ineligible. |
| Hotel-like operation | Rental pooling, restrictions on personal occupancy or hotel services can change the project’s classification. An ordinary condo program and a condotel program are not interchangeable. |
| Insurance or building condition | Unacceptable coverage, failed inspections or critical repairs can block approval even when the individual unit looks renovated. |
Fannie Mae: ineligible projects and exceptions
Do not rely on an old “too many rentals” rule
In 2026, Fannie Mae removed the former 50% investment-property concentration limit for established projects under Full Review on investor loans. That is different from one person or company owning too many units. New-project presale requirements and lender-specific limits still need review.
Ask for the actual written reason for a denial. “Non-warrantable” alone does not tell another lender what exception is needed.
How much down payment does a non-warrantable condo need?
The published examples below point to at least 20% or 25% down before other restrictions. This is not a universal minimum or a survey of every lender. Your final requirement may be higher.
| Program example | Condo limit and purchase implication |
|---|---|
| PennyMac Non-QM A+ | Up to 80% LTV/CLTV for non-warrantable condos: at least 20% down in a purchase with no additional financing. |
| PennyMac Non-QM A | Up to 75% LTV/CLTV: at least 25% down on the same basis. |
| PennyMac Non-QM A-minus | Up to 75% LTV/CLTV: at least 25% down on the same basis. |
| PennyMac DSCR | Up to 75% LTV/CLTV: at least 25% down. This is an investment-property, business-purpose program, not a primary-residence or second-home option. |
| Another published example: First National Bank of America | Its non-warrantable condo page advertises financing up to 80% of value. That is a lender example, not confirmation that its program is available through Mortgage Expert. First National Bank of America: non-warrantable condo financing |
LTV compares the loan with the property value used by the lender; CLTV includes additional financing. For a typical purchase, a lower appraisal can mean more cash is needed. The condo cap is only one limit: occupancy, loan size, credit, documentation and market conditions can produce a lower maximum.
Illustration: a $400,000 condo
Assume an accepted value of $400,000 and no second loan. At 80% financing, the loan is $320,000 and the down payment is $80,000. At 75%, those amounts are $300,000 and $100,000.
Closing costs, prepaid expenses and required reserves are additional. This is arithmetic, not an approval or a quoted loan offer.
PennyMac also reduces the otherwise applicable maximum LTV by five percentage points in a declining market. For example, an 80% cap would become 75%, assuming no lower limit already applies.
What does PennyMac still require from the project?
Its A profile permits selected departures from agency rules, including these limits:
| Project feature | Published condition |
|---|---|
| One owner’s share | No more than 30% of the project. |
| Commercial space | No more than 49%, with acceptable local marketability and no adverse impact. |
| Investor-owned units | No more than 70% under this published non-warrantable program. |
| Overdue association charges | No more than 25% of units at least 60 days behind, including special assessments. |
| Project completion and reserves | Common areas fully complete; the profile specifies a 10% HOA reserve minimum. Confirm the lender’s calculation and any additional reserve requirements. |
These are not mix-and-match allowances. PennyMac does not permit stacking multiple non-warrantable features. Developer-controlled associations require an exception review. Some nonstructural litigation may be acceptable only with the required marketability, financial-exposure or insurance evidence. The complete profile and lender review control.
PennyMac A profile — October 22, 2026
Another lender can draw the line differently
Carrington’s June 2026 update describes management review for selected exceptions, including lower reserve contributions, greater ownership concentrations and insurance deductibles above 5%. That does not establish automatic approval, an exception to every insurance rule, or the current maximum financing for your loan.
What insurance still has to be acceptable?
“The HOA has insurance” is not enough. Have the lender and insurance professional check the coverage, limits, deductibles and exclusions together.
- Master building coverage. PennyMac requires coverage equal to at least 100% of the project improvements’ estimated replacement cost, with supporting evidence. Its current rules allow insured roofs to use actual-cash-value treatment; that is not permission for an uninsured roof.
- Covered risks and separate policies. Check windstorm and other exclusions, and flood coverage where required. The questionnaire also requests liability and fidelity information.
- Unit coverage and deductibles. PennyMac’s July update requires HO-6 when interiors are not fully covered or the master policy has a per-unit deductible. Coverage must address the greater applicable need: restoring uncovered interiors or meeting that deductible. The profile caps project-wide deductibles at 5% of master coverage. The separate per-unit deductible ceiling is $50,000.
PennyMac A+ profile — October 22, 2026
PennyMac: July 1, 2026 insurance and per-unit deductible update
PennyMac: full condo project questionnaire
HO-6 is not a substitute for adequate master coverage
PennyMac does not allow a unit-owner policy to fill a shortage in the building’s master insurance. A permitted deductible arrangement and an underinsured building are different problems.
What can stop financing until it is fixed?
The answer depends on the lender and the type of financing. In the residential programs reviewed here, these are serious stopping points:
- Materially inadequate insurance. Carrington excludes significantly underinsured projects. Another program’s deductible flexibility is not proof that missing building coverage is acceptable.
- Unsafe conditions or unresolved critical repairs. PennyMac excludes projects needing critical repairs or significant deferred maintenance. A larger down payment does not complete those repairs.
- Overdue required inspections. Carrington excludes projects past due on required building inspections. Obtain the applicable report and clear any resulting repair conditions.
- A project outside the selected program. Unacceptable legal rights, use or marketability can also block that lender. A different product may require a separate review; a general non-QM label is not an exception approval.
PennyMac A-minus profile — October 22, 2026
Carrington: June 3, 2026 non-QM condo guideline update
Some problems can be corrected through the association: replacing a deficient policy, supplying missing records or documenting completed repairs. Others may require a genuinely different program. Establish the path before relying on a closing date.
Which condo documents should you request?
Ask the HOA or management company for the project package early. These are project documents in addition to your own income, credit and asset records.
- Project questionnaire and lender certificationThe association or management company supplies project information; the lender completes its approval process. PennyMac requires a fresh questionnaire for each transaction.
- HOA financial recordsCurrent budget, balance sheet, reserves and reserve study; dues-delinquency information and details of existing or proposed special assessments.
- Insurance evidenceMaster declarations and applicable endorsements, replacement-cost support, deductibles, exclusions and insurer contact details. Include separate wind/flood coverage and HO-6 when required.
- Building conditionRequired inspection reports, engineering findings, repair plans and evidence of completed repairs. A promise to repair later is not the same as a cleared condition.
- Legal and ownership recordsCondo declaration and bylaws, ownership and occupancy information, commercial-use details, and any litigation or rental-management documents.
- Unit and transaction reviewThe appraisal, title work and purchase documents remain part of the file. Borrower approval does not replace project approval.
PennyMac: full condo project questionnaire
Fannie Mae: project review and documentation
The exact checklist and document-age limits depend on the lender. For example, PennyMac’s profile requests a balance sheet within 60 days of the note and inspection reports from the preceding 36 months. A questionnaire or appraisal alone is not the full project file.
Florida inspections and reserve studies are separate checks
A milestone inspection evaluates building structure. A Structural Integrity Reserve Study, or SIRS, evaluates specified components and the association’s funding needs. One does not automatically replace the other.
Florida DBPR: milestone inspections and structural reserve studies
Florida’s milestone statute generally applies to residential condo or cooperative buildings with three or more habitable stories, with a 30-year trigger and a possible locally required 25-year trigger. Deadlines and exceptions require a building-specific check.
Florida Statutes §553.899: milestone inspections
PennyMac’s separate lender review covers condos at least three stories tall and 30 years old, or 25 years old within three miles of the coastline. This is a lender condition, not a universal summary of Florida law. Its review requires applicable inspections, completed required repairs, and SIRS/reserve evidence.
PennyMac A-minus profile — October 22, 2026
Get the association’s reports and current budget, then ask the local building department and lender which requirements apply. A recently remodeled kitchen does not establish the condition of the building.
Common questions about non-warrantable condo loans
Does non-warrantable mean the condo is unsafe?
No. A project can miss a program’s rules for ownership concentration or commercial use. Other projects have serious insurance or repair issues. Find out the specific reason before deciding whether to proceed.
Does a high percentage of rentals automatically rule out a conventional loan?
No. Fannie Mae removed the former 50% investment-property concentration limit for established projects under Full Review on investor loans. Single-owner concentration and other requirements still matter.
Can I use a DSCR loan for a condo I will live in?
Not under the PennyMac DSCR program reviewed here. It is for non-owner-occupied, business-purpose investment property. A primary residence or personal second home needs a different eligible program.
Can an HO-6 policy fix an underinsured building?
Under the PennyMac profile, it cannot replace missing master-policy coverage. An HO-6 policy can address specified unit-level needs, including an eligible per-unit deductible, without solving a project-wide coverage shortage.
Can another lender consider a condo one lender rejected?
Sometimes. Different programs allow different exceptions. Get the written reason for the rejection and the supporting HOA documents; changing lenders alone does not resolve an unsafe condition or provide missing insurance.
Will a larger down payment guarantee approval?
No. More cash can satisfy a loan-to-value limit, but it does not waive the investor’s project conditions.
Start with the project’s actual issue
Tell Mortgage Expert the condo’s location, your intended use and the stated reason it did not qualify. Then request the HOA package. Those details help identify which lender’s project review may fit before you commit time and money.
An inquiry is not an application or approval. Confirm lender and channel availability for the specific project. Use the secure document process provided for your file; do not send financial statements or account numbers through a general question form.
Sources and program dates
Checked October 28, 2026. PennyMac profiles are dated October 22, 2026. Carrington’s cited June bulletin illustrates selected permitted exceptions; its complete current matrix must be confirmed for a live loan. These sources describe different programs, not one combined set of rules.
- PennyMac A+ profile — October 22, 2026
- PennyMac A profile — October 22, 2026
- PennyMac A-minus profile — October 22, 2026
- PennyMac DSCR profile — October 22, 2026
- PennyMac: July 1, 2026 insurance and per-unit deductible update
- PennyMac: full condo project questionnaire
- Carrington: June 3, 2026 non-QM condo guideline update
- First National Bank of America: non-warrantable condo financing
- Fannie Mae: project review and documentation
- Fannie Mae: ineligible projects and exceptions
- Fannie Mae: 2026 project-standard changes
- Florida Statutes §553.899: milestone inspections
- Florida DBPR: milestone inspections and structural reserve studies
Estimates only. Not a Loan Estimate, not an approval, not a commitment to lend, not a rate lock. Final terms depend on verified credit, income, assets, property, loan program, lock date, lender conditions, and actual third-party fees. Mortgage Expert, Inc. · NMLS 2412313 · Equal Housing Opportunity.