A non-warrantable condo is a condominium that does not meet the standards set by government-backed mortgage agencies such as Fannie Mae and Freddie Mac. These agencies have strict guidelines for the types of condos they will finance, and if a condo does not meet these guidelines, it is considered non-warrantable.

One of the main reasons a condo might be considered non-warrantable is if the development is not complete or if it has a high percentage of renters. Fannie Mae and Freddie Mac require that at least 51% of the units in a condo development be owner-occupied in order for the development to be considered warrantable. If this requirement is not met, the condo will be considered non-warrantable.

Another reason a condo might be considered non-warrantable is if the development has a high number of delinquencies or foreclosures. If more than 15% of the units in a development are delinquent on their association dues or have gone through foreclosure, the development will be considered non-warrantable.

Additionally, certain types of condos, such as those in a hotel or resort, may not be considered warrantable by Fannie Mae and Freddie Mac.

It's important to note that just because a condo is non-warrantable, it doesn't mean that it's a bad investment. It just means that the options for financing might be more limited and the interest rate may be higher. borrowers may have to look into portfolio loan, which are not conforming loans, and are not sold to Fannie Mae or Freddie Mac.

In conclusion, a non-warrantable condo is a condominium that does not meet the standards set by government-backed mortgage agencies such as Fannie Mae and Freddie Mac. These agencies have strict guidelines for the types of condos they will finance, and if a condo does not meet these guidelines, it is considered non-warrantable. However, just because a condo is non-warrantable, it doesn't mean that it's a bad investment, it just means that the options for financing might be more limited and the interest rate may be higher.