Fannie Mae Condo Questionnaire: What It Is, Why It Matters, and What Makes a Condo Non-Warrantable

When you apply for a conventional mortgage on a condo, your lender doesn't just underwrite you — they underwrite the building too. The primary tool they use is the Fannie Mae condo questionnaire, a structured document the HOA or its management company must complete before the loan can close. If the answers reveal problems, the unit gets classified as non-warrantable, and the loan either dies or gets significantly more expensive.

Understanding what's on the questionnaire before you make an offer gives you leverage. You can assess a building's warrantability before your lender does — and avoid the costly surprises that kill deals at the closing table.

What the Fannie Mae Condo Questionnaire Covers

There are two questionnaire types: the Full Review form (Form 1076) and the shorter Limited Review form. As of 2026, Fannie Mae has eliminated the Limited Review process entirely — all established condo projects now require Full Review, meaning the scrutiny is deeper across the board.

The Full Review questionnaire asks the HOA's management company or board to disclose:

Ownership composition: What percentage of units are investor-owned versus owner-occupied? If investor concentration exceeds Fannie Mae's thresholds (typically above 35-50% depending on project type), the project fails.

Delinquency rate: What percentage of owners are 60+ days past due on assessments? Above 15% triggers ineligibility.

Reserve funding: Does the association have a current reserve study? Is the annual budget allocating the required percentage to reserves? As of August 3, 2026, Fannie Mae requires the budget to reflect the highest recommended allocation from the reserve study — boards can no longer choose the minimum tier to suppress dues.

Pending or active litigation: Is the HOA involved in construction defect litigation, liability suits, or any case where the potential damages exceed the association's insurance coverage? Virtually any significant litigation creates a non-warrantable designation.

Insurance adequacy: Does the master policy cover 100% of the building's replacement cost value? Does the per-unit deductible exceed $50,000? Starting July 1, 2026, the deductible cap became a hard Fannie Mae requirement.

Commercial space percentage: What share of the building's floor area is occupied by commercial tenants? Above 35% is generally disqualifying.

Structural integrity disclosures: For buildings five stories or taller, are there any identified critical structural defects or deferred maintenance items flagged in engineering reports?

Why Non-Warrantable Condos Cost More

Fannie Mae and Freddie Mac back approximately 75% of all conventional U.S. mortgages. When they purchase loans from lenders, those lenders can recycle the capital and make new loans. A non-warrantable condo fails to meet their guidelines, which means the lender cannot sell the loan to the secondary market — they must keep it on their own balance sheet.

That retained risk translates directly into higher borrower costs:

• Down payment: Minimum 10-20% instead of 3-5% for warrantable condos
• Interest rate: Typically 0.5 to 1.5 percentage points above the conventional rate on a comparable warrantable unit
• Loan availability: Only portfolio lenders and some non-QM lenders offer these products — your bank of choice may not participate at all

On a $400,000 condo, the rate difference alone can translate to $150-200 more per month in carrying costs. That's before accounting for the larger down payment you may need to produce.

Common Reasons Buildings Fail Warrantability

Active construction defect litigation is the most common disqualifier. Many newer HOA communities discover latent defects — water intrusion, structural cracks, substandard concrete — and sue the developer. The moment litigation is filed, the building becomes non-warrantable. It stays that way until the case settles and the repair work is completed, which can take years.

High investor concentration disqualifies many urban condo buildings where a significant share of units were purchased by landlords. Once investor-owned units exceed 35-50% of the total, the project fails conventional guidelines.

Severely underfunded reserves are increasingly a disqualifier under the updated 2026 Fannie Mae standards. Lender Letter LL-2026-03 introduced explicit reserve adequacy scrutiny that didn't exist at this level before. A building running at 15% reserve funding is now a risk the secondary market won't absorb.

Condotel structures — buildings that operate with hotel-like amenities, front desks, and short-term rental programs — are almost universally non-warrantable because the unit ownership profile is closer to a hospitality asset than residential real estate.

How to Check Warrantability Before Making an Offer

You don't need to wait for your lender to run the questionnaire. You can do a preliminary check yourself:

1. Ask the listing agent for the most recent condo questionnaire on file — many buildings have a recent one from a prior sale.
2. Request the current reserve study and operating budget from the HOA.
3. Ask directly: "Is there any pending litigation involving the HOA?"
4. Check the HUD condo approval database for FHA status — a lapsed or rejected FHA approval often foreshadows conventional approval problems.
5. Pull the last 12 months of board meeting minutes and look for language about structural repairs, insurance disputes, or special assessments under discussion.

If the answers raise questions, you can commission a pre-offer property review through services like governingdocs.dev or similar platforms that run Fannie Mae compliance checks against the association's documents.

The HOA Survival Guide includes a pre-purchase due diligence checklist that covers exactly what to request from an HOA before your contingency period expires, including how to interpret the reserve study, delinquency reports, and pending assessment disclosures. Get the complete toolkit at firsthomestartguide.com/tools/hoa-survival-guide/.

The 2026 Rule Changes That Tightened Everything

Fannie Mae's Lender Letter LL-2026-03 formalized several changes that directly affect condo buyers:

The 15% reserve baseline is now mandatory for any association without a current reserve study (defined as one updated within the last 24-36 months). Previously, the floor was 10%. Associations that haven't been maintaining a reserve study are suddenly facing budget adjustments that translate into dues increases — which can tip delinquency rates and create a compounding eligibility problem.

The elimination of the Limited Review process means every condo loan going through a conventional lender now faces Full Review scrutiny. Buildings that previously slipped through the streamlined process are now getting their documents examined in detail for the first time.

For buyers, this means the pool of warrantable condos will narrow in the short term as associations scramble to meet updated standards. Buildings that were borderline warrantable in 2024 may not be in 2026. Run your due diligence early, not after the loan is in underwriting.