What warrantable means
Warrantable is not an agency term of art with a published definition. It is industry shorthand for a project that satisfies Fannie Mae's or Freddie Mac's project eligibility standards, so a lender can sell a conventional loan secured by a unit there to one of them. The lender makes the loan intending to sell it, and warrants that the project qualified.
Three consequences follow, and all three are routinely missed.
- It is a project problem, not a borrower problem. Fannie Mae describes project eligibility risk as "distinct from the credit risk presented by individual borrowers." A stronger borrower does not make a project warrantable.
- Warrantable to Fannie is not warrantable to Freddie. The rulebooks overlap heavily and differ in specifics, so a project can qualify under one and fail the other.
- It has nothing to do with FHA approval. Fannie does accept FHA project approval for certain condominium loans, but that is a defined accommodation rather than equivalence.
Fannie's standards sit in the Selling Guide at B4-2.1 (general project standards, waivers, ineligible projects) and B4-2.2 (the review processes). Freddie's sit in Chapter 5701 of the Single-Family Seller/Servicer Guide. One honest note on sourcing: Freddie's Guide text is not openly retrievable, so the Freddie figures on this page come from Freddie Mac's own published FAQ and fact sheets — primary Freddie material, but one step removed from the Guide itself.
The review paths, and the one that just disappeared
Fannie Mae recognises several ways a project can be cleared, set out in B4-2.1-01 as published 5 August 2026: a Waiver of Project Review; a Full Review, done manually or through Condo Project Manager; PERS, Fannie's own Project Eligibility Review Service; acceptance of FHA project approval for certain condominium loans; and, until recently, a Limited Review.
Limited Review is retired. Lender Letter LL-2026-03, dated 18 March 2026, permits lenders to implement the retirement immediately but requires it "for all loan applications dated on or after Aug. 3, 2026." Freddie Mac retired its parallel Streamlined Review on the same hinge date under Bulletin 2026-C: Streamlined Review is available only where the application received date is prior to 3 August 2026. While it was available, Limited Review carried loan-to-value caps and was confined to attached units in established projects.
Two abbreviated paths vanished at once, so a full project review is now the default. More projects get looked at closely, and more get flagged — not because buildings changed, but because the shortcut is gone.
Waivers remain, and were expanded. Fannie's waiver categories now cover detached condominium units, units in condominium projects of ten or fewer units (expanded by LL-2026-03, with attached units in five-to-ten-unit projects required not to be part of a larger development), units in PUD projects, and certain Fannie-to-Fannie limited cash-out refinances below 80 percent LTV. Freddie's Exempt From Review category at 5701.7 covers detached units and certain attached units in projects of eleven or more units. Crucially, a waiver does not waive everything: the baseline requirements applicable to all properties in a condo, co-op or PUD project still apply, including the critical-repairs and evacuation-order bars.
Reviews also go stale. A Full Review of an established project must have been completed within one year prior to the note date; for a new project, within 180 days.
Freddie's dividing line: Established or New
Freddie Mac's structure turns on a single classification, and it is the most useful Freddie number for a consumer to know. An Established Condominium Project is one where at least 75 percent of the units have been conveyed to purchasers other than the developer, and the unit owners control the homeowners association. A New Condominium Project is one where fewer than 75 percent have been conveyed, or the developer still controls the association, or the project is still being constructed or phased. That line is stated consistently across Freddie's April 2025 and August 2026 fact sheets, and it drives which section reviews the project — 5701.5 or 5701.6.
It also drives the most misreported 2026 change. Under Bulletin 2026-C, Freddie retired the 50 percent owner-occupancy requirement for Established Condominium Projects, along with the owner-occupancy project waiver category. Freddie's own FAQ is explicit about the scope: the requirement "was only retired for Established Condominium Projects," and sellers must still determine compliance with the owner-occupancy requirements for New projects. The percentage still applying to New projects is not stated in Freddie's publicly retrievable sources, so no figure for it appears here.
Freddie also runs a Reciprocal Project Review at 5701.9 for projects approved by Fannie Mae or FHA-qualified — one of the few places the rulebooks speak to each other.
The tests themselves
Delinquency
Fannie's Full Review requires that no more than 15 percent of total units be 60 days or more past due on common expense assessments, per B4-2.2-02 published 5 August 2026, and Freddie's published material states the same 15 percent / 60-day standard. Both apply the test separately to regular assessments and to each special assessment rather than cumulatively — a distinction that decides borderline cases.
Reserves, the number about to change
Fannie's Full Review requires replacement reserves of at least 10 percent of the budget, computed as the annual budgeted replacement-reserve allocation divided by annual budgeted assessment income. That rises to 15 percent for Full Reviews on loan applications dated on or after 4 January 2027, under LL-2026-03; as of the 5 August 2026 Selling Guide, B4-2.2-02 still reads 10 percent. Both numbers are correct at different times, and any page stating one without a date is wrong for part of the year. Fannie permits a lender to substitute an acceptable reserve study completed within three years of the project approval. Freddie's published material states 10 percent for both Established and New projects, with no equivalent increase found, and is explicit that special assessments cannot substitute for reserves.
Ownership concentration
Fannie's single-entity ownership limits, per B4-2.1-03 published 5 August 2026, are a maximum of two units in projects of up to twenty units and 20 percent in projects of twenty-one or more, with the same 20 percent applied to co-op stock. Investor concentration is a different matter: Fannie retired its 50 percent investor-concentration limit in LL-2026-03, effective immediately from 18 March 2026. That retired figure is the most-repeated stale number on this subject.
Commercial space and business income
Fannie permits no more than 35 percent of a condo or co-op project to be commercial space. Freddie's published material sets no more than 35 percent for five-to-ten-unit projects with a master association, and no more than one unit commercial in two-to-four-unit projects. Fannie separately treats HOA income above 10 percent of budgeted income from non-incidental business arrangements as ineligible, with 15 percent permitted in specific recreational and foreclosure-related cases.
Categories that are simply out
Fannie's ineligible list at B4-2.1-03 includes timeshare and fractional ownership; hotel, motel and transient operations, with investment plus second-home ownership of 75 percent or more flagged as an indicator; split or segmented ownership; multi-dwelling units on one deed; continuing care facilities; mandatory recreational leases; non-compliant live-work projects; litigation affecting safety or structural soundness; and associations in bankruptcy or dissolution. Freddie's list runs closely parallel.
The post-Surfside rules, which are permanent
After the June 2021 partial collapse of a residential tower in Surfside, Florida, both GSEs issued temporary project eligibility requirements — Fannie's in Lender Letter LL-2021-14 of 13 October 2021, Freddie's in a parallel bulletin that December.
They are no longer temporary, and this is the most consequential misunderstanding in the whole subject. Fannie folded them into the Selling Guide itself through Announcement SEL-2023-06, issued 5 July 2023 and effective for new loan applications on or after 18 September 2023, updating B4-2.1-02, B4-2.1-03, B4-2.2-01 and B4-2.2-02. Freddie's equivalents live in its Guide at 5701.3(n) and 5705.3(q). Anyone treating these as expired emergency measures is working from 2022.
What they do:
- Projects in need of critical repairs are ineligible. Fannie's current B4-2.1-03, published 5 August 2026, describes material deficiencies to be addressed within one year, and caps unfunded repairs at $10,000 per unit within 12 months. Freddie applies the same $10,000-per-unit / 12-month trigger and a three-year lookback on inspection reviews.
- Projects under a current evacuation order are ineligible.
- Failing a mandatory jurisdictional inspection is a critical repair. Freddie's definition covers any project that failed a state, county or other jurisdictional mandatory inspection or certification specific to structural safety, soundness and habitability, with balconies, elevators, foundations, parking structures, stairwells and electrical systems as examples.
- Structural special assessments must be finished. Under the original lender letter language, where a special assessment relates to safety or structural concerns, all repairs must be complete or the project is ineligible.
- Documentation obligations. Lenders must obtain financial documents showing the association can fund the repairs, six months of meeting minutes, inspection and engineering reports from the past five years, and certificates of occupancy or proof of regulatory compliance.
This is how a building goes from financeable to unfinanceable without anything visibly changing. An engineering report or a mandatory milestone inspection lands, and the project fails a test it passed the week before.
Insurance, and the 2026 rewrite
Project insurance is a warrantability test in its own right. Fannie requires compliance with Selling Guide Chapter B7-3 (property and flood) and Chapter B7-4 (liability and fidelity/crime), and LL-2026-03 rewrote much of it as of 18 March 2026: the maximum per-unit deductible rose to $50,000, the inflation-guard requirement was eliminated, and where a master policy carries per-unit deductibles or coverage gaps an individual unit policy is required.
That matters because rising deductibles had been quietly disqualifying otherwise sound associations in hard insurance markets — failing a project review on insurance alone, with no change to the building. The 2026 letter moved that ceiling substantially.
What this means at the transaction level
Four practical points, in the order they usually bite.
- Your application date decides your ruleset. Limited and Streamlined Review turn on 3 August 2026; Fannie's reserve minimum on 4 January 2027. Both key off the application date, not the closing date.
- The association is the source of the evidence. Fannie encourages use of Form 1076, the Condominium Project Questionnaire, or a substantially similar form. An association that will not complete one, or cannot produce budgets, reserve studies, inspection reports and minutes, creates a documentation failure that looks identical to a substantive one.
- Most projects pass. These tests are designed to catch a minority of buildings. An ordinary association with a funded reserve line, current insurance, few delinquencies and no structural findings clears a Full Review without difficulty, and being asked for documents is not a signal that something is wrong.
- You cannot check this yourself. Condo Project Manager is restricted to Fannie-approved seller/servicers; brokers and the public have no access. The lender and the association are the only routes to an answer.
Primary sources: Fannie Mae B4-2.1-03 and B4-2.2-02, both 5 August 2026, and LL-2026-03, 18 March 2026.
Common questions
What is a warrantable condo?
A condominium project that meets Fannie Mae's or Freddie Mac's project eligibility standards, so a lender can sell a conventional loan on a unit there to one of them. It is a judgement about the project, not the borrower. Fannie's standards are in Selling Guide B4-2.1 and B4-2.2; Freddie's are in Chapter 5701 of the Seller/Servicer Guide.
Is Limited Review really gone?
Yes. Fannie Mae's Lender Letter LL-2026-03 of 18 March 2026 lets lenders retire Limited Review immediately and requires it for all loan applications dated on or after 3 August 2026. Freddie Mac retired Streamlined Review on the same date under Bulletin 2026-C. Affected projects now go through a Full Review or qualify for a waiver, which means more projects get examined closely.
Is the reserve requirement 10 percent or 15 percent?
Both, depending on the application date. Fannie Mae's Full Review requires replacement reserves of at least 10 percent of the budget as the Selling Guide stood on 5 August 2026, rising to 15 percent for Full Reviews on loan applications dated on or after 4 January 2027 under LL-2026-03. Freddie Mac's published material states 10 percent for both Established and New projects, with no equivalent increase found.
Do the post-Surfside rules still apply?
Yes, and they are permanent rather than temporary. Fannie Mae incorporated them into the Selling Guide through Announcement SEL-2023-06, effective for new loan applications on or after 18 September 2023; Freddie's sit at Guide 5701.3(n) and 5705.3(q). They make projects in need of critical repairs ineligible, bar projects under an evacuation order, and cap unfunded repairs at $10,000 per unit within 12 months.
Does a high investor percentage still make a condo non-warrantable?
Not at Fannie Mae on that ground alone. Fannie retired its 50 percent investor-concentration limit on 18 March 2026, effective immediately. Freddie Mac retired the 50 percent owner-occupancy requirement for Established Condominium Projects under Bulletin 2026-C but kept an owner-occupancy requirement for New projects. Ownership by investors and second-home owners of 75 percent or more is still treated by Fannie as an indicator of hotel-like operation, which is a separate test.
Can a project be warrantable to one GSE and not the other?
Yes, and it happens regularly. The rulebooks overlap heavily but differ in specifics — commercial space in small projects, owner-occupancy for established projects, and the categories each treats as automatically ineligible. If a project fails one, it is worth asking the lender whether the other reaches a different answer before treating the project as unfinanceable.