Why Non-Warrantable Condos Are Gaining Attention in 2025

As the real estate market evolves in 2025, more buyers and investors are turning their attention to non-warrantable condos. While these properties don’t qualify for traditional financing through Fannie Mae or Freddie Mac, they often come with attractive prices and strong long-term potential. Understanding what makes a condo non-warrantable—and how to finance one—can help you unlock new opportunities in today’s competitive housing market.

What Makes a Condo Non-Warrantable?

A condo becomes "non-warrantable" when it doesn’t meet the eligibility criteria set by government-sponsored enterprises. Common disqualifiers include:

• More than 50% of units being investor-owned

• Excessive commercial space within the development

• Ongoing litigation involving the HOA

• Inadequate reserve funding for repairs

• High rates of delinquent HOA dues

In the wake of recent structural concerns and policy changes, lenders have tightened their review processes. Condos that require significant repairs, have unresolved safety issues, or operate like hotels are more likely to fall into the non-warrantable category.

Financing Challenges and Solutions

Financing a non-warrantable condo can be tricky, as most traditional lenders avoid these properties. That’s where portfolio lenders, credit unions, and non-QM loan products come into play. These alternatives offer more flexible guidelines—though they typically require higher down payments (often 20–25%) and may carry slightly higher interest rates.

If you’re considering buying one of these properties, it’s important to work with a mortgage expert who understands the unique financing requirements. For a deeper dive into current lending trends and buyer tips, check out this helpful guide on non-warrantable condos in 2025.

Is It Worth It?

Despite the challenges, non-warrantable condos can be a smart investment—especially in desirable markets where prices for warrantable units have surged. Lower purchase prices, solid rental potential, and opportunities for long-term appreciation make them appealing to savvy buyers.

Additionally, with the right improvements or policy changes within the HOA, some properties may eventually regain warrantable status—boosting their resale value significantly.

Final Thoughts

If you’re ready to explore this unique corner of the real estate market, make sure you're working with the right lending partner. X2 Mortgage offers tailored financing options and expert guidance to help you make a confident, informed decision in 2025.

Shawn Malkou is the founder of X2 Mortgage and a mortgage expert who helps buyers navigate complex loan options, especially for non-warrantable condos.