Warrantable vs Non‑Warrantable Condos in Downtown

Shopping for a high‑rise condo in Orlando’s Central Business District and seeing the terms “warrantable” and “non‑warrantable”? You are not alone. These labels can determine your loan options, interest rate, and even whether your deal closes on time. In this guide, you’ll learn what the terms mean, how lenders evaluate downtown buildings, and the exact steps to vet a condo before you commit. Let’s dive in.

What warrantable means

A condo is considered warrantable when the project meets eligibility standards used by many conventional lenders that follow Fannie Mae and Freddie Mac guidelines. When a building checks those boxes, you typically have access to more lenders, competitive rates, and flexible down payments.

A non‑warrantable condo fails one or more of those project requirements. That often limits financing to portfolio loans, select program exceptions, or cash, which can mean higher rates, larger down payments, and longer timelines. If you plan to use conventional financing, confirming project eligibility early can make or break your plan.

What lenders review

Lenders do a project‑level review before approving a loan for a unit. While details vary by lender and program, underwriters typically examine:

Ownership and occupancy

They look at the mix of owner‑occupied versus investor‑owned units and whether any single person or entity owns many units. A high investor share can limit conventional options.

HOA finances and reserves

Budget health matters. Underwriters review dues delinquency levels, operating cash flow, reserve accounts, and whether reserves align with a recent reserve study. High arrears or thin reserves are red flags.

Commercial space and mixed‑use

Downtown towers often include street‑level retail or offices. Lenders evaluate how much of the building is commercial and whether those uses affect residential values or cash flows.

Insurance, litigation, governance

Projects must carry adequate master insurance. Material litigation, restrictive covenants that hinder marketability, or governance issues can lead to ineligibility.

Building condition and rentals

If there are structural concerns, deferred maintenance, or widespread short‑term rentals, many conventional programs will not approve the project.

Downtown Orlando nuances

Mixed‑use is common

In the Central Business District, ground‑floor restaurants and retail are normal. Expect lenders to scrutinize the percentage of commercial space and lease structures.

Investor and short‑term rentals

Urban cores attract investors. High investor concentration and short‑term rental activity can conflict with conventional eligibility. Association bylaws that allow transient rentals often pose challenges for lenders.

Aging systems and assessments

Elevators, roofs, and mechanicals in older towers require large capital reserves. Insufficient reserves, recent or pending special assessments, or the absence of a current reserve study can push a building into non‑warrantable territory.

Florida safety and reserves

Following statewide changes after the 2021 Surfside collapse, there is increased attention on structural inspections, reserve funding, and engineering reports. Buyers and lenders now focus more on evidence of recent evaluations, maintenance plans, and compliance with applicable inspection requirements.

How to vet a building

Ask for key documents early in your offer or inspection period. A clean, complete file helps your lender and protects your timeline.

• Project finances and planning
  • Most recent operating budgets and actuals
  • HOA balance sheet with reserve balances
  • Latest reserve study and capital replacement plans
  • Assessment history and any pending special assessments
  • Unit‑owner delinquency report
• Risk and governance
  • Certificate of insurance with coverage limits and deductibles
  • HOA declarations, bylaws, and rules
  • Board meeting minutes for the last 12–24 months
  • Pending litigation disclosures and legal opinions if applicable
• Occupancy and use
  • Owner‑occupancy and rental schedule
  • Policies on leasing and short‑term rentals
  • Commercial lease schedules for mixed‑use buildings
• Unit‑specific items
  • Lender’s condo questionnaire or project certification
  • Estoppel letter or HOA statement verifying dues and status

Pro tip: Ask whether the association is currently approved or has applied for eligibility with Fannie Mae, Freddie Mac, FHA, or VA. That single answer can guide your loan strategy fast.

Financing paths if non‑warrantable

If the building is not eligible for conventional conforming loans, you still have options. Each path has tradeoffs.

• Conventional on eligible projects
  • Widest lender competition and typically the most favorable pricing when the project meets GSE guidelines.
• FHA or VA (if approved)
  • Where a project holds FHA or VA approval, buyers can use those programs. Spot approvals may be possible in limited cases.
• Portfolio loans
  • Banks or credit unions may hold the loan in‑house for non‑warrantable buildings. Expect higher rates, larger down payments, and stricter ratios.
• Cash or bridge strategies
  • Some buyers close with cash or short‑term financing while an association pursues eligibility.

Common impacts include longer timelines, higher borrowing costs, and fewer lender choices. Build that into your plan and offer strategy.

Timeline and strategy

Getting out in front of project eligibility can save weeks.

• Before touring
  • Get pre‑approved and tell your lender you are shopping downtown condos. Ask what they need for a condo project review.
• At offer
  • Request the HOA document package and the condo questionnaire. Keep financing and inspection contingencies aligned with document delivery.
• During inspection
  • Review budgets, reserves, and board minutes for structural or capital issues. Confirm insurance coverage and any pending assessments.
• Prior to appraisal
  • Ensure your lender has everything to clear the project review, not just your personal underwriting.

Resale and risk

A non‑warrantable building can limit your future buyer pool. That can affect price and days on market when you sell. If you are weighing two similar units, factor in each building’s eligibility, reserve strength, and litigation status alongside location and finishes.

Work with a local advisor

Navigating Downtown Orlando condo financing is part market knowledge and part document management. You deserve clear answers before you put earnest money at risk. Our team pairs hands‑on investor advisory with detail‑driven guidance so you can move quickly and confidently on the right unit. Ready to map your financing options and vet specific buildings in the Central Business District? Reach out to Jesse T. Rottinghaus to schedule a complimentary strategy session.

FAQs

What does “warrantable” mean for Orlando condos?

• It means the building meets common eligibility standards used by many conventional lenders, which typically opens access to more loan options, competitive rates, and flexible down payments.

How do short‑term rentals affect CBD condo loans?

• Broad permission or heavy use of short‑term rentals can conflict with lender eligibility rules, which may push a building into non‑warrantable status and limit loan options.

Can I use FHA or VA for a non‑warrantable building?

• You can use FHA or VA only if the project holds the respective approval; spot approvals are sometimes possible but are more complex and less common.

What documents should I request before I offer?

• Ask for budgets, reserves, insurance certificates, HOA minutes, litigation disclosures, occupancy and rental schedules, assessment history, and the lender’s condo questionnaire.

Why do HOA reserves matter in high‑rises?

• Reserves fund major systems like elevators and roofs; thin reserves, high delinquencies, or large upcoming repairs are common reasons lenders decline a project.

How does non‑warrantable status impact resale?

• It can reduce the future buyer pool, increase time on market, and influence pricing, so you should weigh eligibility along with location, condition, and amenities.