Non-Warrantable Condo Loan 2026: 6,572 FHA-Approved Projects, 36,850 Expired on HUD's List (November 13)

Where the word comes from, and what the agencies actually say

Non-warrantable is what lenders say when a condo unit cannot be sold to Fannie Mae or Freddie Mac: the lender could not vouch to the buyer of the loan that the project meets the buyer’s rules. We searched every agency document saved for this page (the Fannie Mae Selling Guide topics, Freddie Mac’s fact sheet and bulletins, and HUD Handbook 4000.1) and the word warrantable does not appear in any of them. The agencies write ineligible project, Unavailable status in Fannie Mae’s Condo Project Manager (CPM), Not Eligible status at Freddie Mac, and Approved Condominium Project at FHA. The distinction matters for the buyer: the test is about the building, so two identical units in two buildings can sit on opposite sides of it.

For an investor the consequence is financial. A loan that cannot go to Fannie Mae or Freddie Mac has to be held by the lender or sold elsewhere, and the buyer meets that through a bigger down payment and a higher rate from a portfolio, bank or DSCR lender (the size of both is set by each lender, not by the agencies; see the arithmetic below). Our pages on the conventional investment-property loan, DSCR loan requirements and investment property loans cover the products themselves. This page covers the earlier question: which condo buildings are shut out, by which test, and how many are on FHA’s list.

What each agency bars, side by side

The thresholds below are as printed in each agency’s own text on the dates shown. Freddie Mac’s Guide itself (guide.freddiemac.com) is a script-driven application that returned no readable text to us, so the Freddie column rests on Freddie Mac’s August 2026 fact sheet and two Guide bulletins (June 27, 2018 and June 1, 2022); a later Guide revision could differ, and Chapter 5701 is the place to confirm any figure before you rely on it.

Three points follow from the table. First, the single-owner test is one an investor-heavy building can fail, and the three agencies disagree by a factor of two or more: Fannie Mae’s 20%, FHA’s 10%, and a Freddie Mac waiver that tolerates up to 49% on a purchase if the owner is selling down. Second, hotel-style management is a hard bar everywhere, not a pricing issue: if your condo is run as a hotel, the agencies will not buy the loan. Third, the dues-and-reserves tests (15% late; 10% reserves today and 15% from January 4, 2027) are about the association’s finances, not yours, and a building can pass them for years and fail the day a special assessment is voted.

The post-Surfside rules: critical repairs and special assessments

After the 2021 Surfside collapse Fannie Mae issued Lender Letter LL-2021-14 on October 13, 2021, with temporary requirements for projects of five or more attached units, effective for loans purchased on or after January 1, 2022. It counted a full or partial evacuation “for more than seven days or an unknown period of time” as significant deferred maintenance, and it required lenders to review any current or planned special assessment, even one paid in full for the subject unit. The letter was not the end state. Announcement SEL-2023-06 (July 5, 2023) wrote the policy into the Guide, said the Letter would be retired, and applied the new rules to loan applications dated on or after September 18, 2023.

For a buyer the practical reading is that an assessment is not only a cost; it is evidence the lender must examine. A building that voted a $10,000-a-unit assessment for balcony repairs on the way to completion may be financeable once the work is documented, and one that has the repair identified but unfunded is not. Fannie Mae’s November 4, 2026 announcement (SEL-2026-10) lists, among its Guide updates, “expanding housing opportunities through accessory dwelling units in condo projects”; we did not read the topic text that implements it, so check B4-2.1-03 and B2-3-04 before assuming an ADU no longer matters.

What changed in 2026: Lender Letter LL-2026-03

On March 18, 2026 Fannie Mae issued Lender Letter LL-2026-03, “Updates to Project Standards & Property Insurance Requirements,” which says the changes are “in alignment with Freddie Mac and in coordination with U.S. Federal Housing (FHFA).” Announcement SEL-2026-07 (August 5, 2026) moved most of it into the Selling Guide, with one exception: the new reserve standard “will not be incorporated into the Selling Guide until after Jan. 4, 2027.” That is why topic B4-2.2-01, dated 08/05/2026, still prints 10%.

For an investor the first row is the news: the cap that made many investor-heavy buildings non-warrantable is gone from Fannie Mae’s rules, though many lenders still apply their own overlays, and a building can still fail on single-entity ownership (20% of units) or on any other test above. For an association the reserve row is the cost: on a $1,200,000 annual budget the minimum rises from $120,000 to $180,000 a year (our arithmetic, assuming the whole budget is assessment income), and a budget that was passing in November 2026 can fail an application dated January 4, 2027.

HUD’s FHA-approved condo list on November 13, 2026

HUD publishes FHA’s approved condominium projects through a public search (entp.hud.gov), which lets you filter by state and by status: Approved, Expired, Rejected or Withdrawn. On November 13, 2026 we ran the search once per jurisdiction and per status, searching on project records (not submissions), and recorded the count HUD printed in each response header (as of 11/13/2026). The export is not a single downloadable file, so what follows is a count of records, not a row-by-row copy of the list, and a record is HUD’s unit of counting, which can include old approvals under the HRAP and DELRAP methods that HUD’s page covers.

Across the 54 jurisdictions the search offers, the totals are 6,572 Approved and 36,850 Expired (the sums are our arithmetic from the 54 state lines). Rejected records add 21,036 and Withdrawn 2,774 (our arithmetic). The approved share of approved plus expired is 15.1% (our arithmetic). The ten jurisdictions with the most approved projects hold 4,698 of the 6,572 (71.5%, our arithmetic).

Four readings stand out. Alaska is the only one of the 54 jurisdictions where approved projects outnumber expired ones (215 against 169). Florida has 72 approved projects against 1,888 expired, and 3,034 rejected: more rejected records than approved and expired combined. Louisiana (108 expired), Mississippi (15), Nebraska (37), West Virginia (13), Wyoming (40), Guam (4) and the Virgin Islands (22) show no approved projects at all, so an FHA buyer there depends on single-unit approval. And in Illinois and Massachusetts fewer than one in thirteen approved-or-expired records is currently approved (7.5% and 7.1%, our arithmetic).

How to read the Expired status: the sample page we saved from HUD shows an approved Anchorage project with a status date of 07/20/2026 and an expiration date of 07/20/2029, three years later, so an expired record is an approval that ran its term, not a finding that the building is unsound. For a buyer it still matters: Handbook 4000.1 requires the lender to confirm the project is on the list of FHA-approved projects at the time of case number assignment, so an expired record is not an approved project you can use today. Fannie Mae will also accept FHA approval for a conventional loan, but only for established projects approved through HUD’s review (HRAP), not through a lender’s delegated review (DELRAP), under topic B4-2.2-03.

When the building is not on the list: FHA single-unit approval

Handbook 4000.1 lets FHA insure a unit in a building that is not on the list, through Single-Unit Approval. The unit must be in a project with at least five units, be not a manufactured home, have a certificate of occupancy that is at least one year old (or the unit occupied), and the loan must either score an Accept from TOTAL Mortgage Scorecard or have a maximum LTV of 90 percent if manually underwritten. FHA may suspend new case numbers when FHA-insured mortgages exceed 10% of units in a project of 20 or more units, and in a project under 20 units the count cannot exceed two. FHA is an owner-occupant program: the handbook requires at least one borrower to occupy the property within 60 days of signing the security instrument and intend to stay at least one year, and says FHA will not insure a mortgage designed to obtain investment properties.

Condotel financing

A condotel is the clearest non-warrantable case. Fannie Mae makes a hotel-style project ineligible when its legal documents require rental pooling, when it is marketed as an investment opportunity, or when it is licensed as a hotel or resort; Freddie Mac lists “Condominium hotel or similar type of transient housing”; FHA names “condominium hotel or condotel” and mandatory rental pooling. All three agencies are closed, so the loan comes from a portfolio lender, a bank program or a DSCR lender that publishes a non-warrantable or condotel box in its guidelines. Several lenders we have reviewed list non-warrantable condos or condotels among their eligible property types, including Acra Lending, Farm Bureau Bank and Deephaven; read each review’s own date, because guidelines move. If you plan to rent the unit on a nightly basis, our short-term rental loan page covers how lenders count the income and which cities can end it.

What it costs: two worked examples (our arithmetic)

A $400,000 unit with 25% versus 30% down. The agencies do not set a down payment for a non-warrantable loan; the lender does. We show the cash arithmetic only, because we cite no lender rate here.

Closing costs, reserves and any HOA special assessment are extra. If a lender prices the 30% case at a lower rate, the $20,000 of extra cash buys that rate; whether it pays back is a rate and holding-period question for your lender quote, not something the agency texts answer.

A 100-unit building tested against the thresholds in the table. Take 100 units, an annual HOA budget of $1,200,000 and 100,000 square feet.

The same building can pass Fannie Mae’s single-owner test with 18 units held by one owner and fail FHA’s with the same 18 units: a lender that checks one agency’s rule will tell you only half the story.

What a reader can do with this

1. Ask for the project documents before you ask for the rate. The budget, reserve study, delinquency list, litigation letter, minutes and any inspection report are what the tests above are run on. A seller or HOA that cannot produce them will not produce an agency-eligible loan.
2. Check the agency status of the building first. For FHA, search HUD’s condominium page by state and status. For Fannie Mae and Freddie Mac, a lender sees a project’s status in CPM or Condo Project Advisor; ask the loan officer which status the project has and why. An Unavailable status bars a Fannie Mae sale.
3. Run the owner-concentration test on the investor mix. If one entity holds 20% or more of a 21-plus unit building, Fannie Mae’s rule is already tripped; a purchase that lowers the concentration can qualify under the waiver (up to 49%) if the owner is marketing units down to 20% or less and no special assessment is pending.
4. Read the assessment history as a loan condition. Under Fannie Mae’s rules a special assessment tied to an unremediated critical repair makes the project ineligible. Ask what the assessment pays for, when it was approved, how much is left and when it ends.
5. If the building fails, price the non-agency loan on three numbers. Down payment (25% versus 30% above), reserve requirement and the property-type list in the lender’s own guidelines. Use our DSCR requirements page to compare lender-published terms.

FAQ

This is analysis of public documents, not investment, legal or tax advice. Sources: Fannie Mae Selling Guide topics B4-2.1-03 (Ineligible Projects, 11/04/2026), B4-2.2-01 (Full Review Process, 08/05/2026), B4-2.2-03 (FHA-Approved Condo Review Eligibility, 09/04/2018) and B4-2.2-05 (Projects with Special Considerations, 08/06/2025), Selling Guide Announcements SEL-2023-06 (July 5, 2023), SEL-2026-07 (August 5, 2026) and SEL-2026-10 (November 4, 2026), and Lender Letters LL-2021-14 (October 13, 2021) and LL-2026-03 (March 18, 2026), all read November 13, 2026; Freddie Mac’s fact sheet “Condominium Unit Mortgages and Project Reviews” (August 2026) and Guide Bulletins 2018-10 (June 27, 2018) and 2022-11 (June 1, 2022); HUD Handbook 4000.1 (transmittal issued August 12, 2026), Sections II.A.8.p and II.C; HUD’s FHA Condominiums search at entp.hud.gov, queried November 13, 2026. Freddie Mac’s Guide application and VA’s Condo Report (an interactive page on VA’s LGY Hub that gave us no downloadable list on November 13, 2026) could not be read as text and are not scored.