Your investor found a strong condo deal and three lenders already turned it down. The problem usually isn't the borrower or the numbers. It's a project classification most lenders aren't built to handle.
It's one of the most frustrating calls a broker can get. Your investor client found a great condo to add to their portfolio, the numbers work, their credit is solid, and the lender comes back with a decline that has nothing to do with any of that. The reason: the condo is "non-warrantable."
For a lot of brokers, that word is where the deal dies. It shouldn't be. Non-warrantable condos are financeable. They just require a lender that underwrites them on purpose instead of one that treats the label as an automatic no. Here's what the term actually means, why so many lenders walk, and how we look at these files differently.
A "warrantable" condo is one that meets the guidelines set by Fannie Mae and Freddie Mac, the agencies that back conventional mortgages. When a condo project checks all of those boxes, conventional financing is available and most lenders will compete for it.
A non-warrantable condo is simply a project that falls outside those agency guidelines. That's it. It's a classification of the project, not a judgment on the unit, the borrower, or whether the deal makes sense. A beautiful unit with a well-qualified buyer can sit in a project that happens to be non-warrantable, and that single classification is enough to take conventional financing off the table.
A condo project can be considered non-warrantable for any number of reasons. Some of the most common:
01
When a large share of the units are owned by investors rather than owner-occupants, agencies get cautious.
02
When one entity or person owns a large percentage of the units in the building.
03
Mixed-use projects with retail or office space above agency thresholds.
04
If the homeowners association is involved in a lawsuit, most financing dries up fast.
05
Projects still being built, or buildings where the association hasn't been fully turned over.
06
Thin HOA reserve funds, or a project that operates heavily as short-term rentals.
A project can be flagged for just one of these, or several at once. The key thing to understand is that none of them say anything about your individual borrower's ability to perform. They're features of the building, not the deal.
THE REFRAME
The unit can be excellent and the borrower can be strong, and the project can still be non-warrantable. Once you separate the building's label from the merits of the actual loan, these deals start to look a lot more doable.
When a project is non-warrantable, conventional and agency financing is off the table, and that's the only thing a lot of lenders know how to do. They're built to sell loans into the agency system, so the moment a project falls outside those guidelines, they have no path forward and they decline.
That's why an investor can get turned down two or three times on a perfectly sound deal. It isn't that the deal is bad. It's that each of those lenders only had one lane, and the project didn't fit it. The borrower is left thinking something is wrong with their file, when really they just need a different kind of lender.
As a DSCR lender, we don't underwrite to agency warrantability rules in the first place. We underwrite to the property's cash flow and the strength of the overall picture. That's the fundamental reason we can often get a non-warrantable condo done when a conventional lender can't: we're not trying to fit it into a box it was never going to fit.
When one of these files comes in, we look at the full picture rather than a single disqualifying checkbox. That includes things like the project's investor and single-owner concentration, where construction stands if the building isn't finished, and the litigation status of the association. Some of those factors carry more weight than others. Active litigation, in particular, tends to be the hardest hurdle, but the point is that we evaluate the deal on its actual merits instead of stopping at the label.
The honest answer on whether we can do a specific non-warrantable condo is: it depends on the file. There are real nuances, and the only way to know is to look at it. But "non-warrantable" alone is never the reason we say no, and that's exactly the deal other lenders are handing back to you.
When a deal gets declined for being non-warrantable, that's not the end of the road. It's a signal that the file is in the wrong lane. The unit, the borrower, and the numbers can all be strong. The project just doesn't fit the agency mold.
For a broker, knowing where to take those files is its own edge. The next time an investor comes to you frustrated that their condo deal keeps getting kicked back, you don't have to walk away from it. You just have to know who actually underwrites these, on purpose.
Educational only. Whether any specific non-warrantable condo can be financed depends on the individual file and is subject to underwriting review.
Don't let the label kill the deal. Let's look at the file together.
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¹ All loans are for business purposes only and subject to Brick City Capital's underwriting, due diligence, and approval. Terms, amounts, and timelines may vary by borrower, property, and structure. Not all products are available in every state. Past results do not guarantee future outcomes.
² Representative examples are for illustrative purposes only. Past closings are not a guarantee of future results. Actual closing timelines and amounts will vary by transaction and borrower qualifications.
