Shopping for a Streeterville condo and hearing lenders talk about warrantable vs. non‑warrantable? You are not alone. That label can shape your loan options, rate, down payment, and even resale timeline. In this guide, you will learn what warrantable means, why it matters in Streeterville’s high‑rise landscape, the rules lenders use, and the steps to confirm a building’s status before you write an offer. Let’s dive in.
What warrantable means
A warrantable condo meets the project rules that let lenders sell loans to Fannie Mae or Freddie Mac. That typically opens the door to conventional conforming financing and a wider lender pool. If a project fails those rules, the unit is non‑warrantable, so you may need FHA or VA approval, a portfolio or non‑QM loan, or more cash. You can see how agencies define ineligible projects in Fannie Mae’s Selling Guide.
Why it matters here
Streeterville has many mixed‑use and luxury towers with retail podiums, hotel components, and large master associations. Those features trigger the exact tests lenders run, such as commercial square footage, owner occupancy, single‑owner concentration, insurance, and litigation. Short‑term rental policies can also influence eligibility if they look like hotel operations. In a neighborhood of high‑amenity buildings, early project due diligence is essential.
Key agency rules
- Fannie Mae project reviews check items like commercial share, owner concentration, HOA delinquencies, reserves, and litigation. See the project standards overview.
- Fannie examples often used by lenders:
- Single‑entity ownership cap in projects with 21+ units: 20% of units. (guide reference)
- Commercial space cap: 35% of the project or building by square footage. (guide reference)
- HOA dues delinquent 60+ days: generally must be under 15% for a full review. (full review process)
- Critical repairs or litigation tied to safety or structure can block eligibility. (ineligible projects)
- Freddie Mac uses Condo Project Advisor for automated assessments and similar checks. A common single‑entity example for 21+ unit projects is 25%. See Freddie’s Condo Project Advisor FAQ.
- FHA uses a different approval track. Current guidance includes a minimum owner‑occupancy of 35%, and HUD may suspend new case numbers when FHA‑insured loans exceed 50% of units in a project. See HUD’s handbook materials on Scribd. FHA has historically been more conservative on commercial space, with 35% often cited and exceptions reviewed by HUD; see HUD’s commentary on commercial space caps.
What triggers non‑warrantable
- Ongoing developer or sponsor control, or incomplete phases.
- High rental share or low owner occupancy.
- Commercial or hotel components above caps.
- HOA dues delinquencies above 15%.
- Litigation affecting safety, structure, or project finances.
- Single‑owner concentration above agency limits.
- Condotel or hotel‑like operations, such as rental pooling or daily housekeeping. See examples in Fannie Mae’s ineligible list.
Buyer impacts
If a building is non‑warrantable, you will face fewer lender options and often higher rates and down payments. Specialty programs commonly require bigger cash commitments, and documentation can slow timelines. If the building is FHA‑approved, FHA can be a path for qualified buyers. For typical non‑warrantable product terms and tradeoffs, review this practical explainer on non‑warrantable condo financing.
Seller impacts
Non‑warrantable status can shrink your buyer pool, push more all‑cash or portfolio buyers, and create pressure on pricing and concessions. You can protect your timeline by gathering HOA documents early and highlighting financing paths in your listing disclosures. For a plain‑English look at how financing status affects marketing and offers, see this overview from The Mortgage Reports.
How to confirm status
Ask the listing side or your lender to assemble the condo packet lenders use for project reviews:
- Current HOA budget, reserve balance, and any reserve study. (project standards)
- Master insurance declarations page with limits and deductibles. (ineligible projects)
- HOA delinquency report showing units 60+ days past due. (full review process)
- Litigation summary or attorney letter.
- Ownership roster showing single‑entity concentration and an occupancy breakdown.
- Evidence of developer turnover to the owners’ association.
Then ask your loan officer to run a project check in Fannie’s or Freddie’s system. Freddie’s tool is described in the Condo Project Advisor FAQ. If you need FHA, verify whether the association has an FHA Condo ID or whether single‑unit approval could apply via HUD’s handbook on Scribd.
If non‑warrantable
Expect fewer conventional quotes and tighter loan‑to‑value limits. Many non‑agency options require larger down payments, often in the 10 to 25 percent range or higher depending on program and borrower profile, with rate premiums compared to conventional loans. See typical patterns in this non‑warrantable guide. Plan extra time for underwriting and be ready to document HOA health in detail.
Changes to watch
- Insurance and structural scrutiny rose after Champlain Towers South, and some associations now struggle to secure coverage that meets agency expectations. That can move a project from eligible to unavailable quickly. For national context, see this Wall Street Journal report.
- Chicago now requires monthly data reporting by short‑term rental operators starting July 2025, and policy shifts can ripple into HOA rules. Hotel‑style or transient rental models can undermine agency eligibility. Read about the new rule in this Chicago STR update.
- Agencies continue to refine their automated project review tools. Early project checks save time and prevent surprises.
Streeterville checklist
- Confirm commercial square footage is at or below 35% of the building.
- Verify no single owner holds more than 20% of units in 21+ unit projects.
- Pull HOA delinquency, insurance, reserves, and litigation documentation.
- Ask your lender to run a project review before you list or offer.
- If the building is non‑warrantable, price and market to attract buyers using portfolio or cash, and line up realistic financing options early.
Ready to buy or sell with clarity in Streeterville? Get local guidance, a tight plan, and media‑forward marketing with Patrick O'Brien.
FAQs
What does warrantable mean for a Streeterville condo?
- It means the building meets Fannie Mae or Freddie Mac project rules, so conventional conforming loans are widely available and usually at better terms.
How do I check if a Streeterville building is warrantable?
- Gather the HOA packet and ask your lender to run the project through Fannie or Freddie’s review tools, then confirm delinquencies, insurance, litigation, and concentration limits.
Can I use FHA for a Streeterville condo purchase?
- Yes, if the building is FHA‑approved or qualifies for single‑unit approval, and if owner‑occupancy and FHA insurance concentration caps are within HUD limits.
Do short‑term rentals affect condo loan eligibility in Chicago?
- Yes, hotel‑style or transient rental policies can make a project non‑warrantable, and Chicago’s evolving STR rules add scrutiny to HOA policies.
What happens if a building has active litigation?
- If the litigation affects safety, structure, or finances, agency loans may be unavailable until resolved, so expect limited lender options.
How do non‑warrantable condo loans differ from conventional loans?
- They are often portfolio or non‑QM products with higher rates, larger down payments, and stricter documentation compared to agency‑eligible loans.
