Warrantable vs non-warrantable condo: why the building matters

The price is lower than a house and the payment fits. Then the lender says it has to review the project, and nobody can tell you how long that takes. On a condo you are financing a unit inside a building the lender also has to like. Here is what warrantable vs non-warrantable condo means, how FHA condo approval works, and how to keep the building from blowing up your closing date.

Warrantable vs non-warrantable condo: what the words mean

A warrantable condo sits in a project that meets Fannie Mae and Freddie Mac’s condo project standards. A lender can sell that loan to them, so you get a regular conventional loan with regular conventional rules.

A non-warrantable condo sits in a project that misses one or more of those standards. The usual reasons are about the building, not you:

• The HOA is in litigation.
• One person or company owns a big share of the units.
• Too many owners are behind on dues.
• The project has commercial space, hotel-style rentals or mandatory membership fees.

If you have too many investors, it is not really a condominium anymore. It is an apartment building. Fannie Mae dropped its 50% limit on investor-owned units in established projects in 2026, but FHA still checks owner occupancy (more below), and some lenders keep investor limits of their own.

A non-warrantable condo can still be financed, just not with a standard conventional loan. Some lenders keep their own condo programs, and some non-QM lenders will lend after a full review of the project. Expect a bigger down payment and a higher rate, because the lender cannot sell that loan to Fannie Mae or Freddie Mac. This is one place where having many lenders to choose from matters; see why lenders’ rules differ.

Even a warrantable condo prices a little worse than a house. You are financing airspace, and lenders usually add a pricing adjustment for it.

How a condo project review works

The lender reviews the association through documents: the condo questionnaire, the HOA budget and financial statements, the master insurance policy, and, on new projects, a pile of developer paperwork. It is checking whether the building is financially healthy and whether it fits the loan program’s rules.

That means part of your file depends on people you do not control: the HOA board, its management company and, on a new building, the developer. Your credit and income can be perfect and the file still sits. Project approval can be the only thing standing between your file and a closing.

How deep the review goes depends on the project. Fannie Mae used to offer a short version, called a limited review, for many established projects, but it retired that review for applications dated on or after August 3, 2026. As of November 2026, a unit in a larger attached project on a Fannie Mae loan gets the full review, while a detached unit or a unit in a project of 10 or fewer units can often skip the project review. Plan on the building getting a real look, and start the paperwork early.

The condo questionnaire: what it asks and why it stalls

The condo questionnaire is the lender’s form for the HOA or its management company. It asks about the money and the risks: owner-occupied versus investor-owned units, how much any one owner holds, dues delinquencies, pending litigation, insurance, commercial space and whether the developer still controls the board. The association usually charges a fee for it, and for the condo documents that go with it.

It stalls because the people filling it out do not work for you or for me. On one file of mine, the questionnaire was not back until about four weeks into the review. So I start it first:

Your monthly dues matter to the loan, too. They count in your debt-to-income ratio like any other part of the payment, so they shrink how much you can borrow.

FHA condo approval: project approval and single-unit approval

FHA will only insure a condo in an approved project, or a single unit approved on its own. Either way the building is reviewed, not just you. There are three ways in:

1. The project is already on HUD’s approved list. Your lender checks the list, and the project side is mostly done.
2. A full project approval. The lender gathers the association’s and developer’s documents and either submits the project to HUD or, at some lenders, approves it under its own authority. This is the long road.
3. Single-unit approval. Approval for just your unit, in a project that is not on the approved list. It is the shortcut, and it has its own tests.

Under FHA’s current handbook, single-unit approval needs a project of at least five units with a certificate of occupancy for your unit, at least half of all units owner-occupied, no more than 15% of units behind on their association bills, and insurance that meets FHA’s standards. FHA also caps how many FHA loans one project can carry: no more than two in a project under 20 units, and about 10% of the units in larger ones. Manufactured home projects are out, and a manually underwritten file is capped at 90% of the value.

In my files, single-unit approval has also been off the table while the developer still controls the HOA, which is the usual situation in a new building with a phase still being finished. Ask your lender how it treats that before you count on the shortcut.

If the project is approved, the approval belongs to the project, not to your loan. In my files, when an FHA condo loan moved to another FHA lender, the case number and the appraisal went with it.

Why a new-construction condo can outlast your rate lock

A new building is where condo loans go sideways. With the developer still running the HOA, the lenders on my file would not use single-unit approval, so it took the full project review, and most of the documents had to come from the developer: financial statements, builder certifications, permits and occupancy certificates, a certified list of unit sales, the management agreement, plat maps and proof the unfinished amenities will be finished. On one file of mine there were about 14 of those conditions, and every one had to clear before the lender could even send the project to HUD.

Here is how that file ran, counted from the review notice:

That is close to two months before HUD even sees it, with about $1,500 of review cost already spent. A 30-day lock does not survive that. Extensions cost price in escalating steps, and re-locking at the original rate would have cost a couple of points.

If your file is already stuck, the options are: let the lock lapse and float through the review, then relock; ask the lender in writing for a pricing exception that cites the review wait; or move to an FHA lender with a stronger project-approval team, since the project approval and, in my files, the case number and appraisal can move with you. What no lender can fix is an association that will not produce its documents. More on timing a lock in how rate locks work.

Is a condo a good buy around Richmond?

As a home to live in, a condo can make sense if the payment, dues included, fits and the building passes review. As an investment, I steer people away. In my view condos hold up in a handful of very large metro markets, and Richmond is not one of them. Value retention and appreciation favor houses on their own lots, and a condo adds the review, the dues and the pricing adjustment on top. That is my opinion from the market I work in, not a rule.

If you are weighing a condo against a house, compare the full payments with dues and the loan options for each. FHA loan basics and conventional loan rules cover the programs, and how much house you can afford shows how dues fit your ratio.

If you are serious about a particular unit, the building is the first thing to check, before the inspection and before the appraisal. A five-minute look at the project’s approval status can save you weeks.