A warrantable condo meets Fannie Mae and Freddie Mac guidelines: no single entity owns more than 10% of units, at least 50% of units are owner-occupied, the HOA has adequate reserves (typically 10%+ of budget), no pending litigation against the association, and adequate insurance coverage. Warrantable condos qualify for conventional financing with standard rates and down payment requirements.
Florida's SB 4-D and SB 154 require condos over 3 stories to complete milestone structural inspections and maintain reserve funding through Structural Integrity Reserve Studies (SIRS). Lenders now verify compliance with these requirements. Condos that haven't completed required inspections or lack adequate reserves may be classified as non-warrantable, requiring larger down payments and portfolio lending.
Non-warrantable condos can't use conventional Fannie Mae/Freddie Mac financing. Options include portfolio loans from banks and credit unions (typically 20-25% down), non-QM loans, FHA spot approval for individual units, and jumbo loans from lenders with condo-specific programs. Interest rates are usually 0.25-0.75% higher than conventional rates.
Fannie Mae requires the HOA to budget at least 10% of annual assessments for reserves. However, after Florida's new legislation, many lenders prefer 15-20% or higher reserve funding. The HOA must also have no deferred maintenance that could result in special assessments. A Structural Integrity Reserve Study (SIRS) is now required for Florida condos to determine adequate reserve levels for major components.