High-Rise and Non-Warrantable Condo Financing

Why high-rise condos are often non-warrantable

High-rise condo projects in urban markets frequently fail Fannie Mae and Freddie Mac's warrantability requirements for several reasons:

• Investor concentration: In new or recently converted buildings, a single investor or developer may own more than 35% of units, triggering the non-warrantable classification
• Pre-sale requirements: New construction condo projects must have at least 51% of units under contract or closed before conventional financing is available for individual units
• Hotel-condo operations: Buildings with hotel services, front desks, or mandatory rental programs are classified as condotels and don't qualify for residential financing
• Pending litigation: HOA litigation — even minor disputes — can disqualify a project
• Commercial space: Buildings with more than 35% commercial space don't qualify

Portfolio financing for non-warrantable condos

Portfolio lenders hold loans on their own books rather than selling to Fannie/Freddie, giving them flexibility to finance non-warrantable condos. Terms for non-warrantable condo portfolio loans typically include:

• Minimum 20–25% down payment
• Rate premium of 0.5–1.5% above comparable warrantable condo rates
• Stricter credit score requirements (typically 680+)
• Lower maximum loan amounts than conforming limits

Not all portfolio lenders finance non-warrantable condos — this is a specialty product. Morgan Hardy works with lenders who have specific non-warrantable condo programs.

Nashville high-rise condo market

Nashville's downtown and Midtown condo market includes several high-rise buildings. Some are fully warrantable and qualify for standard conventional financing. Others — particularly newer buildings where investor ownership is high, or buildings with hotel-style amenities — require portfolio financing. Checking warrantability status before making an offer is essential in Nashville's condo market.