Condo problems
Why won't my condo qualify for financing?
The direct answer
Condo loans have two reviews: you and the project. You can personally qualify and still have the loan stopped because of the HOA, insurance, litigation, reserves, repairs or how the building operates. I use this page to help buyers and owners identify the project problem first, then look at the financing paths that still make sense.
I work with buyers and owners in California, Utah, Oregon and Arizona, and I arrange the financing; the lender makes the decision on the project.
Zach von der Linden, mortgage broker and Branch Manager, West Capital Lending · NMLS 1652805
Wholesale pricing · California, Utah, Oregon and Arizona
5.0 across 66 reviews on Experience.com (read on 2026-09-24) · Text reaches Zach directly · Last updated 2026-10-19
Text me the condo address and what you were told.
No credit pull happens from a conversation. Texts go to Zach's cell.
Start with your situation
- My condo won't qualify. Can I still buy it?
- My condo won't qualify for a refinance. What can I do?
- How do I pay an HOA special assessment I can't afford?
- My San Clemente condo got a special assessment. How do I pay it?
- Behind on HOA dues or facing an HOA lien? Can I refinance or get a HELOC to pay it off?
Own the condo and want cash without refinancing? Start with using home equity in a condo.
Buying and need a letter? Get pre-approved, and send me the condo address so I can look at the project too.
What does warrantable mean?
Warrantable is industry shorthand for a condo in a project that meets the project standards for the conventional loan being considered, usually Fannie Mae or Freddie Mac rules. Those rules look at the association's budget, reserves, insurance, litigation, delinquent dues, how many units one owner holds, commercial space and the condition of the buildings. Your own income and credit are reviewed separately.
Review got stricter in 2026. Fannie Mae retired its Limited Review for loan applications dated on or after August 3, 2026, and Freddie Mac retired its Streamlined Review for applications received on or after the same date, so attached units in established projects now get a Full Review.
Why is my HOA reserve funding a problem?
Fannie Mae Full Review asks for a budget that puts at least 10% of the annual budgeted assessment income toward replacement reserves, and for loan applications dated on or after January 4, 2027, that minimum becomes 15%. Freddie Mac made the same change. An acceptable reserve study can be used instead, but the budget then has to include the highest recommended reserve allocation in the study. Delinquent dues are part of the same review, so I ask for the budget and the delinquency report together.
Can an HOA lawsuit stop my condo loan?
It can. For Fannie Mae, litigation involving the safety, structural soundness, habitability or functional use of the project makes it ineligible. Pre-litigation such as arbitration or mediation counts too when it is reasonably expected to proceed. Minor disputes may be treated differently depending on the facts. Talk with an attorney about the lawsuit itself; I only look at what it means for the loan.
Can a special assessment stop condo financing?
Not automatically. The lender looks at what the assessment is for, when it was approved, the amount still to be collected and when it will be paid off. If it is funding a critical repair that has not been fixed, the project can be ineligible until the repair issue is addressed.
If you need to pay one, how do I pay an HOA special assessment I can't afford? covers the options and what California law says, and the San Clemente condo special assessment page covers the local reporting.
Can too many units owned by one investor cause a problem?
Yes. Under Fannie Mae's single-entity rule, no single entity may own more than 2 units in a project with 5 to 10 units that is part of a master association or in a project with 11 to 20 units, or more than 20% of the units in a project with 21 or more units. Units the association owns and rents out count toward the limit too.
Can too much commercial space make a condo non-warrantable?
It can. Fannie Mae says no more than 35% of the project, or of the building it is in, may be commercial or nonresidential space. A project operated or managed as a hotel or motel, for example one whose documents restrict when owners can live in their units, is ineligible for Fannie Mae on its own.
What changed with California balcony inspections?
California Civil Code section 5551, the balcony inspection law known as SB 326, requires a condo association to have exterior elevated elements inspected at least once every nine years, with the first inspection due by January 1, 2025, in buildings with three or more attached units. Repairs that follow can lead to assessments, and Fannie Mae's guide lists balconies among the items it looks at for critical repairs.
How do I check whether a condo is FHA or VA approved?
Search the project on HUD's FHA condo search and VA's condo report. FHA also allows Single-Unit Approval in some projects that are not on its list, and VA requires the project to be approved by VA. I check both before assuming either one solves a conventional problem.
Questions people ask next
What does non-warrantable mean?
It is industry shorthand for a condo in a project that does not meet the project standards for the conventional financing being considered, usually Fannie Mae or Freddie Mac rules. It describes the building and the association, not you.
Can my condo become non-warrantable after I buy it?
Yes. Litigation, reserves, insurance, delinquent dues and repairs can all change after you buy, and the agency rules changed in 2026 and change again for applications dated on or after January 4, 2027. A refinance is reviewed under the rules in effect when you apply.
Does a special assessment automatically stop financing?
No. The lender reviews what the assessment is for, when it was approved, the amount still to be collected and when it will be paid off. If it funds a critical repair that has not been fixed, the project is ineligible for Fannie Mae until the repair is addressed.
Can FHA finance a condo that is not on the approved list?
Sometimes. FHA insures condo loans in FHA-approved projects and in some projects that are not approved but meet its Single-Unit Approval requirements. I check the project against those requirements before counting on it.
Can a non-warrantable condo still get a loan?
Sometimes. Fannie Mae and Freddie Mac rules decide which loans they buy, and a loan that is not sold to them does not have to meet those rules. I'd check whether a lender I work with offers financing for the building, based on why it failed.
Sources and checked dates
Sources: Fannie Mae, Lender Letter LL-2026-03 (checked 2026-10-07) · Freddie Mac, Single-Family Seller/Servicer Guide Bulletin 2026-C (checked 2026-10-07) · Fannie Mae Selling Guide, B4-2.2-01, Full Review Process (checked 2026-10-07) · Fannie Mae Selling Guide, B4-2.1-03, Ineligible Projects (checked 2026-10-07) · California Civil Code 5551 (checked 2026-09-26) · HUD, FHA Condominiums (checked 2026-10-07) · VA Loan Guaranty, Condo Approval for Lenders (quick reference) (checked 2026-10-07).
Show each claim on this page, what it depends on, and the date it was checked (9)
| What we say, and what it depends on | Source | Checked |
|---|---|---|
| Fannie Mae Lender Letter LL-2026-03: Fannie Mae is retiring the Limited Review process; lenders may implement the retirement immediately but must do so for all loan applications dated on or after August 3, 2026. | Fannie Mae, Lender Letter LL-2026-03 | 2026-10-07 |
| Freddie Mac Bulletin 2026-C: the Streamlined Review project review type is retired for mortgages with application received dates on or after August 3, 2026; the reserve allocation for capital expenditures and deferred maintenance increases from a minimum of 10% to a minimum of 15% of the annual budgeted assessment income for application received dates on or after January 4, 2027; and a seller with an unexpired project review completed before those dates must still confirm the project complies with the new requirements for applications received on or after them. | Freddie Mac, Single-Family Seller/Servicer Guide Bulletin 2026-C | 2026-10-07 |
| Fannie Mae Selling Guide B4-2.2-01: the project budget must provide for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget, calculated by dividing the annual budgeted replacement reserve allocation by the association's annual budgeted assessment income; a lender may use an acceptable reserve study instead, and the budget must include the highest recommended reserve allocation amount in that study. No more than 15% of the total units may be 60 days or more past due on common expense assessments. | Fannie Mae Selling Guide, B4-2.2-01, Full Review Process | 2026-10-07 |
| Fannie Mae Lender Letter LL-2026-03: for the Full Review process, the minimum replacement reserve allocation becomes 15% of the annual budgeted assessment income for loan applications dated on or after January 4, 2027; when a reserve study is used instead, the budget must include the highest recommended reserve allocation amount in the study. | Fannie Mae, Lender Letter LL-2026-03 | 2026-10-07 |
| Fannie Mae Selling Guide B4-2.1-03 lists ineligible project characteristics, including: pending litigation that relates to the safety, structural soundness, habitability, or functional use of the project (pre-litigation such as arbitration or mediation reasonably expected to proceed is treated the same way, and some minor litigation is eligible); projects in need of critical repairs; nonresidential or commercial space above 35%; projects operated as hotels or motels; and single-entity ownership above 2 units in projects with 5 to 10 units that are part of a master association, 2 units in projects with 11 to 20 units, and 20% in projects with 21 or more units. | Fannie Mae Selling Guide, B4-2.1-03, Ineligible Projects | 2026-10-07 |
| Fannie Mae Selling Guide B4-2.1-03: for each current or planned special assessment, the lender must review its purpose, when it was approved, its original amount and the remaining amount to be collected, and the expected payoff date. "If the special assessment is associated with a critical repair and the issue is not remediated, the project is ineligible." Routine repairs funded through special assessments within guidelines are not considered critical. | Fannie Mae Selling Guide, B4-2.1-03, Ineligible Projects | 2026-10-07 |
| California Civil Code 5551 (the balcony inspection law known as SB 326): “At least once every nine years, the board of an association of a condominium project shall cause a reasonably competent and diligent visual inspection to be conducted by a licensed structural or civil engineer or architect of a random and statistically significant sample of exterior elevated elements for which the association has maintenance or repair responsibility.” “The first inspection shall be completed by January 1, 2025, and then every nine years thereafter.” If an element “poses an immediate threat to the safety of the occupants,” the inspector reports it to the association immediately and to the local code enforcement agency within 15 days. “This section shall only apply to buildings containing three or more attached multifamily dwelling units.” | California Civil Code 5551 | 2026-09-26 |
| HUD: FHA insures condominium loans to purchase or refinance a unit in an FHA-approved condominium project or in a project that is not FHA-approved but meets the Single-Unit Approval requirements. HUD publishes a search for FHA-approved condominium projects. | HUD, FHA Condominiums | 2026-10-07 |
| VA: "In order to be eligible for VA loan guaranty, a condominium or lot must be approved by VA." VA publishes a condo report search on its LGY Hub. | VA Loan Guaranty, Condo Approval for Lenders (quick reference) | 2026-10-07 |
Written for and accountable to: Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending.
Last updated 2026-10-19.
Verify him: NMLS Consumer Access, ID 1652805 · 66 reviews on Experience.com.
Sources for product claims are listed on this page, with the date each was checked.
Text Zach the condo address
Tell me the address and what the lender or the HOA told you. I'll start with the project problem, then the financing paths that still fit.
No credit pull happens from a conversation. Texts go to Zach's cell.