Condos · Fannie Mae B4-2.1-03Non-warrantable condo: when Fannie Mae will not finance a unit
A conventional loan on a condo depends on the whole project, not just the unit. Fannie Mae will not purchase loans on units in projects with ineligible characteristics, including: projects in need of critical repairs – repairs that significantly affect safety, soundness, structural integrity or habitability, mold or water intrusion, a failed mandatory structural inspection, or unfunded repairs costing more than $10,000 per unit that should be done within 12 months; an evacuation order until the unsafe condition is fixed; pending litigation naming the HOA, or the developer over safety, structural soundness, habitability or functional use; projects operated as hotels or motels; a single entity owning more than 20% of units in a project of 21 or more units (2 units in smaller projects); more than 35% nonresidential space; timeshares; houseboats; and projects that are terminating or in insolvency. A structural or mechanical inspection from the last 3 years must show no unaddressed critical repairs.
Characteristics that make a project ineligible (B4-2.1-03)
Critical repairs
Safety, structural or habitability issues; mold or leaks; failed mandatory inspection; unfunded repairs over $10,000 per unit due within 12 months.
Evacuation order
Ineligible until the unsafe condition is remediated and the building is deemed safe.
Litigation
HOA named in pending litigation, or developer litigation about safety, soundness, habitability or use – with narrow exceptions for minor matters.
Hotel-like
Rental pooling, owner occupancy limits, hotel services or hotel management.
Single owner
More than 20% of units in projects of 21+ units; more than 2 units in projects of 11–20 units.
Commercial space
More than 35% of the total space used for nonresidential purposes.
Other
Timeshares, houseboats, continuing care facilities, terminating or insolvent projects, mandatory outside club memberships.
Documents the lender may review – ask early
- The HOA questionnaire and budget.
- Board meeting minutes and any special assessment details: purpose, approval date, amount left and payoff date.
- Structural or mechanical inspection reports from the last 3 years, and engineer's reports on completed repairs.
- Information on any lawsuit, arbitration or mediation involving the HOA.
What the TC does on a condo deal
- Order the HOA questionnaire and resale documents the day the contract is signed – they take time.
- Ask the listing agent about special assessments and inspections before the financing deadline.
- If the project may be ineligible, the buyer may need a different loan – tell the agents early, while the contingency is open.
Questions buyers and agents ask
What makes a condo non-warrantable?
For Fannie Mae, project characteristics such as critical repairs, safety-related litigation, hotel-like operation, one owner holding too many units, more than 35% commercial space, or a terminating project (B4-2.1-03).
Can I get a conventional loan on a condo with a special assessment?
Possibly. The lender reviews each special assessment; if it is tied to a critical repair that is not yet remediated, the project is ineligible.
Does an old structural inspection matter?
If one was completed within 3 years of the lender's project review, the lender must review it, and it cannot show unaddressed critical repairs.
Related guides
ClosingCode adds the HOA documents to every deal that has an HOA and lets you request them by link – the first step to knowing whether the project will finance.
Start free trialSource: Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects (08/05/2026), selling-guide.fanniemae.com, read October 25, 2026.
General information about Fannie Mae conventional loans, not legal or financial advice. FHA and VA approve condo projects separately, and lenders can add rules. ClosingCode is software; it is not a lender. This guide is not a substitute for the advice or services of an attorney.