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Is my condo warrantable?

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A condo project counts as warrantable when it passes ten Fannie Mae project criteria: reserve allocation, study substitution, study currency, delinquency, single-entity ownership, commercial space, critical repairs, litigation, business income, and termination or disqualifying arrangements. Ballast's complimentary Standing Check screens all ten in about three minutes.

What warrantable means

"Warrantable" is market shorthand. Fannie Mae's Selling Guide never uses the word; it lists project characteristics that make a project ineligible, and a lender delivering a loan to Fannie Mae has to show the project carries none of them. A project that clears the list is one where buyers can get a conventional loan that Fannie Mae will purchase. A project that fails it is one where a loan on a unit cannot be sold to Fannie Mae, so a buyer needs financing that does not depend on that: a lender that keeps the loan itself, or cash. FHA and VA run their own separate project approvals.

Freddie Mac runs a parallel review with its own guide. This page follows the Fannie Mae criteria, which are the ones Ballast has verified against the primary source.

The ten criteria, in plain words

The board does not need to read the Guide to know where it stands. Each criterion is one question about the association.

  1. Reserve allocation. Does the adopted budget put at least 10% of annual assessment income, net of four permitted exclusions, into reserves? For loan applications dated on or after January 4, 2027, the figure is 15%.
  2. Study substitution. If the budget is below that share, does a current reserve study exist, not prepared on the baseline method, whose highest recommended allocation the budget funds? A qualifying study stands in for the budget test.
  3. Study currency. Is the reserve study no older than three years, measured from the date the lender approves the project?
  4. Delinquency. Are no more than 15% of units 60 or more days past due on regular assessments, and separately, on any single special assessment? Two tests, not one.
  5. Single-entity ownership. Does any one owner hold more units than the Guide allows for a project of that size? Projects of 21 or more units use a 20% limit of total units; projects of 11 to 20 units use a two-unit limit; projects of 5 to 10 units are tested on the two-unit limit only when they belong to a master association or larger development.
  6. Commercial space. Is commercial or mixed-use floor area 35% or less of the project? Rental apartments and hotel space count as commercial.
  7. Critical repairs. Are there any unresolved critical repairs, safety deficiencies, evacuation orders, failed mandatory inspections, or more than $10,000 per unit in unfunded repairs due within 12 months? Any open item stops the loan on its own.
  8. Litigation. Is the association a party to pending or anticipated litigation about safety, structural soundness, habitability or functional use? Minor matters are excepted, and the lender decides what is minor.
  9. Business income. Does 10% or less of budgeted income come from non-incidental business arrangements, with a separate 15% allowance for association-owned recreational amenities?
  10. Termination and disqualifying arrangements. Is the association terminating, dissolving or insolvent, bound by mandatory recreational memberships or leases, or operated like a hotel?

Any single failure makes the project ineligible. Critical repairs outrank everything: a project with an open critical repair is non-warrantable regardless of how the other nine come out.

Why boards find out late

A non-warrantable project does not announce itself. Dues get collected, the budget gets adopted, and nobody reads the budget against the criteria until a buyer's lender reviews the project for a loan. That review may be the first time the question is asked at all.

Two dates make this year different. From August 3, 2026, a reserve study that relies on baseline funding no longer supports the study substitution. From January 4, 2027, the reserve allocation test rises from 10% to 15% of assessment income. An association that was comfortably warrantable in 2025 can fail in 2027 on the same budget.

What to do

  1. Run the Standing Check (board or manager, about three minutes). Enter the adopted budget's assessment income, reserve line and exclusions, the delinquency counts, ownership, commercial area, open repairs and litigation. The result names which criteria the association clears and which it misses, with the rule behind each.
  2. Pull the reserve study (board secretary or manager). Note its completion date and its funding method. If it is older than three years or built on baseline funding, it cannot carry the study substitution.
  3. Fix the denominator first (treasurer). Utility pass-through, special assessment income, income already allocated to reserves and incidental income the association does not rely on all come out of assessment income before the reserve share is measured. Many budgets clear the test on this step alone.
  4. If the share is still short, choose the cheaper path (board vote). Raise the reserve line to the threshold, or commission a current, non-baseline reserve study and fund its highest recommended allocation. Ballast prepares it as a Full Reserve Study, or as a Reserve Study Update when the prior record supports one.
  5. Clear any hard stop before anything else (board and counsel). An open critical repair or a qualifying lawsuit stops a loan regardless of the budget. Those need a licensed contractor or an attorney, not a reserve analyst.
  6. Put the result in the board minutes and hand it to the manager. The next buyer's lender will ask the same questions, and a dated answer is ready when it does.

What this page does not tell you

This page screens; it does not approve. A lender applies the full file and the full Guide, and may ask for special consideration on a project it believes has merit. Freddie Mac's criteria differ in places and are not stated here. Nothing here is a warrantability determination, legal advice or a promise of financing.

Sources

Thresholds on this page are those of ruleset ll-2026-03 and its scheduled step ll-2026-03-step-2027. Primary sources accessed October 20, 2026.

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