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Buying a condo: the warrantability checklist that can kill your deal

A working buyer’s guide to condo warrantability, HOA red flags, and the documents you should demand before making an offer.

Last updated April 2026

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When you buy a single-family house, you’re buying one thing. When you buy a condo, you’re buying two: your unit, and a fractional share of the building’s problems. The lender cares about both. If the building flunks lender review, your loan dies — even if your personal file is perfect.

This guide covers warrantability (the rules that decide whether a lender can finance any unit in the building), the documents to demand before you make an offer, and the red flags that should make you walk.

Bottom line

A “warrantable” condo can be financed with conventional, FHA, and VA loans. A “non-warrantable” condo can only be financed with portfolio loans at higher rates and tighter terms — severely shrinking your buyer pool when you eventually sell. Non-warrantable status crushes resale value.

Verify warrantability before you make an offer, not after. Your lender can pull the building’s history, but they won’t do it until you’re under contract. Pre-screen yourself.

Fannie Mae warrantability rules

Fannie Mae sets the de facto baseline. After the June 2021 Champlain Towers South (Surfside) collapse, Fannie and Freddie issued temporary project eligibility requirements in late 2021 / early 2022 around critical repairs, special assessments, and deferred maintenance. Those “temporary” requirements have effectively become permanent — they’ve been in place for years now and are baked into how every conventional condo loan gets underwritten. Current requirements:

Owner-occupancy

  • For a buyer who will owner-occupy, the project owner-occupancy ratio is generally not a hard cutoff under current Fannie rules. For investor purchases, at least 50% of units must be owner-occupied or second homes.
  • Some condotels and resort condos are ineligible entirely; new construction has ramp-up exceptions during sponsor sell-out.
  • This counts the whole project, not just your unit.

Concentration limits

  • A single owner (other than a sponsor in a new project) can’t own >25% of units
  • In small projects (5–20 units), the cap loosens to one extra unit above the 25%

Insurance

  • Master policy must cover 100% replacement cost
  • Deductible can’t exceed 5% of policy limit
  • Fidelity bond / crime coverage required for projects with HOA budgets above a threshold

Financial reserves

  • HOA must allocate at least 10% of operating budget to reserves
  • Or have a current reserve study showing adequate funding for major components

Litigation

  • HOA can’t be a defendant in litigation that affects building safety or value
  • Minor litigation (collections, slip-and-falls) usually OK; structural litigation kills warrantability

Structural integrity (post-Surfside)

  • No “significant deferred maintenance” on critical components — roof, elevators, foundation, load-bearing walls, plumbing risers, electrical, HVAC, parking structures, balconies, and similar. “Deferred maintenance” can disqualify a building even without an active assessment.
  • Any special assessment related to safety, soundness, structural integrity, or habitability requires lender review and may make the project ineligible until resolved.
  • Building must have a current engineering inspection or reserve study addressing structural systems.
  • Florida law (post-Surfside SB 4-D) now requires Milestone Inspections at 25/30 years and full Structural Integrity Reserve Studies (SIRS) for buildings 3 stories or higher — the deadline for compliance was December 31, 2024, and many older Florida buildings are now hitting six- and seven-figure assessments as a result. Other coastal and high-rise states are moving in the same direction.

Delinquency

  • No more than 15% of unit owners can be 60+ days delinquent on HOA dues

If the building flunks any of these, Fannie won’t buy the loan — which means most lenders won’t make it on conventional terms.

FHA condo approval

FHA has its own approved condo list. Two paths:

  1. Project approval: the entire building is FHA-approved. The HOA submitted documentation, paid the fee, and the project sits on the HUD condo lookup. Easy to verify at hud.gov.
  2. Single-unit approval (SUA, formerly “spot approval”): FHA approves just your unit even if the project isn’t fully approved. Cap is 10% of units in projects with 10+ units (projects under 10 units are limited to 2 SUAs total). The unit still has to meet underlying project criteria — it’s not a free pass.

Without one of these, no FHA financing for any unit in the project.

VA condo approval

VA maintains its own approved condo list, separate from FHA’s. Smaller list overall. Your VA lender can check it. Single-unit approvals are not available for VA — the project must be fully approved.

Documents to demand BEFORE you make an offer

Have your agent request these from the listing agent or HOA management company. If the seller resists, that’s itself a signal. Note that many states require a resale certificate or condo questionnaire to be delivered to the buyer within a set window after contract (commonly 7–15 days), and most states give the buyer a right to rescind the contract within a few days of receiving it if anything in the package is materially adverse. Use that window aggressively.

  • Reserve study (every 3–5 years, ideally). The single most important document. A third-party engineer assesses every major component (roof, elevators, HVAC, parking deck, plumbing risers, facade), estimates remaining life, and projects funding needed. Compare projected need to actual reserve balance — the funded ratio.
  • 2–5 years of HOA financials and budgets. Look at trends in reserve contributions, special assessments, and operating margins.
  • Insurance master policy declarations. Verify it meets Fannie/lender requirements (replacement cost, deductible, fidelity bond).
  • Last 24 months of board meeting minutes. The bodies are buried here. Mentions of structural concerns, deferred projects, lawsuits, or contentious votes about assessments are all flags.
  • HOA questionnaire (Form 1076 or lender equivalent). Your lender will require it. Ask for the most recently completed one — if the HOA has filled it out for another buyer in the last 90 days, much of the work is done.
  • CC&Rs and bylaws. Read for rental restrictions (some buildings ban short-term rentals or have caps on long-term rentals), pet policies, alteration approval requirements.
  • Special assessment history and any pending assessments. Ask directly: “Are any special assessments pending or under discussion?”

Red flags that should make you walk

  • HOA delinquency rate above 15% — auto-disqualifies for Fannie. Below 15% but rising trend is also a warning.
  • Reserves funded below 30% of recommended (per the reserve study). Means a special assessment is essentially inevitable.
  • Special assessment in the last 12 months for structural work, or one currently pending. That’s your share of a real bill, often $10k–$50k+.
  • Owner-occupancy below 50% for an investor purchase, or rapidly trending below for an owner-occupant. Even where it doesn’t formally kill warrantability for your loan today, it crushes resale value because the next investor buyer can’t finance.
  • Active structural litigation. The building is fighting about who pays for a serious problem. You don’t want to inherit that.
  • HOA in receivership or bankruptcy.
  • No reserve study, or one older than 5 years.
  • Master insurance deductible >5% or coverage less than full replacement cost.
  • Single owner controls >25% of units (concentration risk).
  • Sponsor still controls the board in a building that’s been occupied 3+ years (developer hasn’t turned it over — why?).

The special assessment risk

This is the most underappreciated condo risk. The roof needs replacing, the parking deck has spalling concrete, the building needs a new boiler — the HOA can vote a special assessment that requires every owner to write a check.

Concrete numbers: a 50-unit building needs $5M in facade work. Your share at 1/50th = $100,000. Even at 2% (a 100-unit building), you’re writing a $50,000 check on top of your monthly dues. Some HOAs allow financing the assessment over 5–10 years; many don’t.

The reserve study is your forecast. If reserves are well-funded and the study is current, your special assessment risk is bounded. If reserves are underfunded and major components are aging out, plan on assessments — they’re just a question of when and how big.

The HOA Analysis calculator helps you stress-test ongoing dues plus likely assessment exposure against your monthly budget.

HOA dues are not just a fee

A $600/mo HOA isn’t just $600. It’s a monthly bill that:

  • Counts in your DTI for loan qualification (use the DTI calculator to see how much it cuts your max loan)
  • Will increase 3–6%/year, sometimes more after a reserve study
  • Covers some things you’d otherwise pay separately (insurance on the building shell, water/sewer in many buildings, trash, often gas for heating). Net out the savings.
  • Doesn’t go away if you stop using the gym or pool

A condo with $400/mo dues and a 5%/year increase becomes $1,000/mo dues in 18 years. Plan for it.

Property-type pricing impact

Conventional loans price condos worse than single-family. Expect 0.25–0.75% rate add-on for condos with <25% down. The property type calculator shows the exact LLPA hit by LTV and credit.

FHA prices condos the same as single-family, assuming the project is approved.

Common mistakes

  • Falling in love before due diligence. Warrantability and reserves matter more than the kitchen finishes.
  • Skipping the reserve study. It’s the most important document in the package.
  • Trusting verbal HOA assurances. “There are no planned assessments” needs to be in writing and consistent with the board minutes.
  • Forgetting that dues count in DTI. A $700 HOA can shave $80k+ off your max loan amount.
  • Assuming a new building is safe. Newly built doesn’t mean warrantable — ramp-up exceptions, sponsor control, and partial occupancy can all create issues.
  • Ignoring the rental restrictions. If you might ever want to rent the unit, check the bylaws BEFORE you buy. Many buildings cap rentals at 25–30% of units, or have multi-year owner-occupancy requirements before you can rent.
  • Skipping a private inspection because “it’s in a building.” Your unit still has plumbing, electrical, HVAC, and finishes that need a real inspection. The HOA covers the building shell — not what’s behind your drywall.
  • Not asking about the master insurance “walls-in” gap. Most master policies cover bare walls only. You need an HO-6 policy (condo unit owner’s insurance) to cover interior finishes, personal property, and loss assessment for special assessments tied to insured events. Lenders typically require it; budget $300–$700/yr.

Tools you’ll use

For loan-program eligibility on condos, see the loan types guide.