Warrantable vs non-warrantable condos: what it means for an LA purchase

The warrantable vs non-warrantable condo question decides which loans can be used in a building, and in Los Angeles it usually comes up in escrow, after the offer is signed. A warrantable condo sits in a building that meets Fannie Mae and Freddie Mac project standards. A non-warrantable condo sits in one that fails at least one of them, which takes conventional conforming loans off the table until it's fixed.

This page covers what the label means, the ten things that fail a building under the August 2026 Selling Guide, what happens if a building fails mid-escrow, and what it means at each loan type above $800,000. For how the 2027 rule changes hit each loan type, see our condo loan rules for 2027.

What "warrantable" means

"Warrantable" is industry shorthand. It isn't a term Fannie Mae uses in its guides. When a lender sells a conventional loan to Fannie Mae or Freddie Mac, the lender warrants, or promises, that the loan meets their rules. Those rules cover the borrower and the unit, and they also cover the condo project: the building, its association and its finances.

So a warrantable condo is one where a lender can make that promise about the project. A non-warrantable condo is one where it can't, because the project fails at least one standard. The buyer's credit has nothing to do with it. Two buyers with the same income and the same down payment get the same answer in the same building.

The 10 things that make a building non-warrantable

Fannie Mae lists ineligible project characteristics in Selling Guide B4-2.1-03 and the Full Review requirements in B4-2.2-02, both dated August 5, 2026. Freddie Mac's rules mirror them closely. A building reviewed under Full Review generally fails if any of these apply:

1. Reserves. The budget allocates less than 10% of annual assessment income to reserves today, and less than 15% for loan applications dated on or after January 4, 2027. The exception is a current reserve study funded at its highest recommended level. It's a budget line test, not a bank balance test.
2. Critical repairs. Repairs that affect safety, structural integrity or habitability. This includes failing a mandatory state or local inspection, and any unfunded repair over $10,000 per unit that should be done within 12 months. Fannie names balconies, parking structures, elevators, waterproofing and foundations. An evacuation order makes a project ineligible until it's fixed.
3. Special assessments for an unremediated critical repair. The lender documents every assessment: purpose, amount, what's left and when it ends.
4. Litigation about safety, structure, habitability or use, including pre-litigation mediation. Narrow exceptions cover insurer-defended cases, HOA collection suits and small matters.
5. Delinquency. More than 15% of units 60 or more days behind on dues, or on a special assessment.
6. Commercial space over 35% of the project. Rental apartments and hotel space inside the project count as commercial.
7. Single-entity ownership. One owner holding more than 20% of units in a building of 21 or more, or more than 2 units in a building of 5 to 20.
8. Condo-hotel or transient use. Projects run like hotels are ineligible. Signs lenders look into include hotel-type services, short-term rental operations, units under 400 square feet, and 75% or more of units held as investments or second homes.
9. Insurance that doesn't meet the master policy rules. From July 1, 2026, the per-unit master deductible is capped at $50,000.
10. Non-incidental business income above 10% of the budget.

Three items on the old list are gone. Fannie retired the 50% investor concentration cap and Freddie retired its owner-occupancy requirement for established projects, both on March 18, 2026. A building with a high share of rented units can now pass a conventional review on that point. Roofs may be insured at actual cash value, and the inflation guard rule was dropped.

The two items to watch in LA right now are the first two. The reserve line rises in January, and the critical repair rule is where California's SB 326 balcony inspections and the city's seismic retrofit orders meet the lending rules.

It's decided per loan, and it can change

There is no public list of warrantable buildings, and the label isn't permanent. It's decided loan by loan, when a lender reviews the project, using the association's current budget, insurance, litigation, repairs and ownership. A building can pass in March and fail in June, or fail in June and pass again after the board adopts a new budget.

Unit count decides which review happens at all. Since March 18, 2026, a building of 10 or fewer units may get a Waiver of Project Review from Fannie, or be Exempt from Review at Freddie, provided it isn't Unavailable and its insurance complies (5 to 10 unit buildings also can't be part of a master association). Since August 3, 2026, buildings of 11 or more units get a Full Review. The lighter Limited Review is gone.

On unit count alone, 10 Palms in Hollywood (9 residences on our building page) falls in the waiver range, and The Century in Century City (140 residences) falls in Full Review. Neither fact says how a review would come out. Our building pages list unit count and year built for about 5,000 LA buildings, and our boutique condo guide covers the small-building end of the market.

Fannie's "Unavailable" status, and the Condo Status Finder

"Unavailable" is the hard version of non-warrantable. Fannie flags the project in Condo Project Manager, the system lenders use, and conventional loans to Fannie stop until the association documents a fix. Fannie says it has updated the status of more than 2,000 projects since 2022 after problems were fixed.

The list isn't public. Lenders see it, buyers and agents don't. Fannie's last public figure was 1.2% of projects Unavailable, in June 2023. Reporting from March 2025 put 685 California projects on it, 237 of them in Los Angeles County. We haven't found a 2026 count.

Boards and managers can check their own building. Fannie's free Condo Status Finder is open to association boards, managers and their authorized advisors, after registration. If you're selling, it's a fair question for your board before you list. If you're buying, your lender is the one who can see it.

When a building fails mid-escrow

It usually happens the same way. The buyer is in contract with a conventional loan, the lender orders the condo questionnaire and the association's documents, and the project review comes back ineligible: a budget under the reserve line, a pending lawsuit, an unfunded balcony repair, or an Unavailable flag. The buyer's approval was never the issue.

The options from there:

• Switch loans. Move to a jumbo, portfolio or non-QM lender that accepts the issue. Expect a larger down payment, a higher rate, a new appraisal and more underwriting time.
• Ask the association to cure it. Some failures are fixable on paper: a budget amendment, an insurance change, documentation that a repair is funded or done. Others take months.
• Renegotiate. A smaller buyer pool is a pricing fact. Credits, price changes and longer closing dates are all on the table.
• Extend or cancel. An extension buys time for a cure or a new lender. Cancelling is the last option.

The deposit question turns on the loan contingency. On the standard California purchase agreement, the loan contingency runs for a set number of days (check the form version in your contract). If the buyer removes it and the building then fails review, the deposit can be at risk. The protection is timing: get the association's documents at the start of escrow, and have the lender run the project review before contingencies come off. Our condo buyer checklist lists the documents in order.

One more timing detail. Freddie Mac says even an unexpired project approval must be rechecked against the new rules for applications received on or after the effective date. A building that passed last year isn't automatically approved now.

What warrantable means at each loan type

Above $800,000 in Los Angeles. General information; your lender's rules decide.

Loan type	Do Fannie and Freddie project rules apply?	If the building is non-warrantable
Conventional conforming and high-balanceUp to $1,249,125 in LA County (2026)	Yes, directly. With 20% down this covers prices up to about $1.56M.	This loan isn't available in the building until the issue is fixed.
JumboAbove $1,249,125	Not by law, since jumbo loans aren't sold to Fannie or Freddie. Many jumbo programs run a full project review and follow similar standards.	Depends on the lender. Some accept a building with a specific issue. Ask each one.
Non-QM and portfolio	No. The lender sets its own building rules.	Often the main financed option. Reported 2026 terms run 20% to 25% down and about 0.5 to 2 points above conforming rates.
Cash	No project review.	The purchase closes, but the same issues show up as dues increases, assessments, and fewer financed buyers when you sell.

Two things apply to every loan type. HOA dues count in a financed buyer's debt-to-income ratio, so a dues increase lowers what that buyer qualifies for. And serious structural problems or active litigation limit almost every lender, not only Fannie and Freddie. Our page on jumbo and non-QM condo loans in LA covers terms and the questions to bring to a lender.

If you're selling

Your buyer's lender will review your building whether you look first or not. The resale package now includes the most recent SB 326 balcony report, so a bad report reaches every buyer. Before listing, gather the budget (reserve line and percent funded), the reserve study, the master insurance declarations, the SB 326 report and 12 months of minutes. The condo seller checklist has the full list, and our guide to selling an LA condo covers pricing and timing.

If you're on the board

Most failures on the list are fixable with a vote or a document. The reserve line is a budget line item, and calendar-year associations are sending their 2027 budgets between October 2 and December 1, 2026. Our HOA board brief lays out what lenders will test from January 4.

Common questions

What does non-warrantable condo mean?

It means the condo building fails at least one Fannie Mae or Freddie Mac project standard, such as reserves, litigation, critical repairs, delinquency or commercial space. Conventional conforming loans are not available there until the issue is fixed. Buyers can still use a jumbo or portfolio lender that accepts the issue, a non-QM loan, or cash.

How do I find out if a condo is warrantable?

Ask your lender to review the project, ideally before you write the offer and always before you remove your loan contingency. The lender orders the condo questionnaire and reads the budget, reserve study, insurance, minutes and any litigation or assessment notices. There is no public list, and Fannie Mae's Unavailable flag is visible only to lenders and, for their own building, to boards and managers.

Can a building go from warrantable to non-warrantable?

Yes. Warrantability is decided loan by loan using the association's current documents, so a new lawsuit, a failed inspection, an unfunded repair or a budget below the reserve line can change the answer. From January 4, 2027, a building budgeting less than 15% of assessment income to reserves may fail a Full Review unless it funds its reserve study's highest recommendation.

Is a non-warrantable condo a bad purchase?

Not necessarily. Some buildings fail on a paperwork issue the board can fix with a budget vote, while others have serious repairs ahead. The label tells you which buyers can finance there and roughly what it costs them. What matters is why the building fails, whether it is fixable, and what that means for dues, assessments and your future buyer pool.

Do small condo buildings need to be warrantable?

Buildings of 10 or fewer units may qualify for a Waiver of Project Review at Fannie Mae, or Exempt from Review at Freddie Mac, since March 18, 2026. Buildings of 5 to 10 units cannot be part of a master association, and any waived project still cannot be Unavailable and must have compliant insurance. Lenders can add their own requirements.

This page is general information about published agency guidelines, statutes and ordinances. It is not legal, tax, lending or insurance advice, and we are not lenders, attorneys or insurance brokers. Lenders apply their own overlays, and only a lender’s review decides whether a specific loan in a specific building works. Rules and dates change: confirm anything that affects a decision with your lender, attorney, insurance broker or association. Facts are current as of October 27, 2026.