At a Glance: Non-warrantable condos can be financed through portfolio and non-QM bank statement loans, which evaluate the building’s project risk separately from the borrower’s income, using 12 or 24 months of bank deposits, subject to lender guidelines, with loan sizes typically ranging from $300,000 to $30,000,000.
- Project eligibility and income documentation are two separate underwriting questions; a bank statement program only addresses income, not the building’s warrantability status
- Qualifying income is typically calculated from eligible deposits divided by statement months, after applying an expense ratio that commonly runs 20% to 50% depending on business type and employee count
- Leverage steps down as loan size increases, with primary residence purchases reaching up to 90% at the $300,000–$1,000,000 tier for borrowers with credit around 680 or better, subject to lender guidelines
- Structural-safety findings, such as evacuation or unsafe-conditions orders, are typically a harder stop than routine HOA litigation, even for non-QM lenders
- A condo can lose warrantable status after purchase with no change at the unit level, meaning refinancing may later require a portfolio or non-QM lender regardless of the borrower’s original qualification history
The condo’s problem and the borrower’s income problem are two separate underwriting questions, and a bank statement program answers only one of them. Both still need to clear review before a file gets submitted.
What “Non-Warrantable” Actually Means
A condo becomes non-warrantable when the project fails Fannie Mae’s eligibility rules — not when the buyer does. Several issues can knock a building off the approved list. These include active litigation, deferred structural repairs, thin HOA reserves, too much commercial space, or one owner controlling too many units.
This is entirely a secondary-market concept. Fannie Mae’s Selling Guide spells out which project traits make a condo ineligible for purchase or securitization. You can find this under Fannie Mae Selling Guide, B4-2.1-03 Ineligible Projects. The guide even lets lenders request a waiver if they believe a flagged project still has merit. Why does this waiver path exist? Because agency lenders can’t sell a loan the GSEs won’t buy. No secondary sale means no conventional financing.
Here’s the part buyers miss: a beautifully renovated, well-located unit can be completely unfinanceable through a bank simply because the building down the hall is in litigation. The unit is fine. The project isn’t. That distinction is the whole reason portfolio and non-QM lenders exist in this space — they hold loans on their own books, so they get to set their own project rules instead of waiting on GSE approval.
How Underwriting Treats It — Step by Step
Two separate questions run side by side on a non-warrantable condo file, and a bank statement program only answers one of them. Question one: is the building reviewable at all? Question two: how does the borrower’s income get documented? Skipping either one stalls the file.
Step one — project review still happens. Non-QM doesn’t mean no review. Lenders in Lendmire’s wholesale network still pull an HOA questionnaire, reserve study, insurance certificate, delinquency rate, and litigation disclosure before touching income documentation. A lender might shrug off high commercial space but decline flat-out on unresolved structural problems — the specific reason a project is non-warrantable matters more than the label itself.
Step two — income gets built from deposits, not returns. This is where a bank statement loan does its job. Instead of traditional personal-income documentation, the borrower submits 12 or 24 months of bank statements, and qualifying income comes from eligible deposits divided by the statement months, after an expense ratio is applied. Across the programs Lendmire places files with, that ratio generally scales with the business’s employee count and structure — lower for a service business with no employees, higher for businesses with staff or product-based operations — or an accountant-supplied ratio can be used instead. A profit-and-loss method, capped around 80%, is also available on many files. Transfers from the borrower’s own business into a personal account count in full — no discount there.
Step three — the two files merge. Once the project clears review and income is calculated, the deal works like any other non-QM submission: credit pull, reserves verification, appraisal (often on the standard rent-schedule form used across the industry), and entity documents if the property sits in an LLC. Twelve months versus 24 months isn’t a fixed rule — a shorter window can produce a stronger number for growing income, while a longer window smooths out a lumpy year. Lenders often run both before locking in a program.
The Structures and Variations Available
Loan sizes on this program run from $300,000 to $30,000,000 through two separate wholesale ladders. A portfolio non-QM bank-statement program carries files to $6,000,000, and a bank portfolio jumbo program carries twelve-month-statement files on its own ladder — 65% loan-to-value to $5,000,000, 60% to $10,000,000, and 55% to $30,000,000, with interest-only capped at 60% or the band’s ceiling, whichever is lower. The bank ladder starts above $4,000,000 and overlaps the portfolio program through $6,000,000; past that point it stands alone.
Leverage on a primary residence steps down as size climbs. Loans between $300,000 and $1,000,000 can reach 90% on a purchase with credit around 680 or better. That ceiling drops to 85% up to $2,000,000, 80% up to $3,000,000, and 75% at the top credit tier up to $4,000,000. Everything above $4,000,000 gets reviewed case by case before submission — never a flat “up to” figure at that size. Second homes and investment properties generally run about five points lower at every size tier, with investment property cash-out typically capped around 70% to 75% depending on the size band.
Credit sits at a 660 floor on the portfolio program, stepping to 680 on the bank program and 700 above the super-jumbo threshold. Debt-to-income can run as high as 50%. Reserves scale with loan size — typically 3 months up to $500,000, 6 months up to $1,500,000, and 9 months above that, plus 2 months per additional financed property up to a 12-month cap. First-time investors are usually held to a 12-month reserve requirement regardless of loan size.
Cash-out has real limits worth flagging early. On the portfolio program, cash-out is unlimited at or below 60% LTV, but caps around $1,500,000 in cash-in-hand above that threshold. If a borrower needs more proceeds than that, restructuring toward a lower LTV or a different program is usually the conversation.
Two paths exist for borrowers whose income doesn’t come from a steady paycheck at all. An asset allowance divides liquid assets by 36, 60, or 84 months to supplement qualifying income, depending on debt-to-income and loan size — a standalone or above-$3,500,000 file typically uses the 84-month divisor. An assets-only path requires no debt-to-income calculation, but liquid U.S. assets need to cover the loan amount, closing costs, and 60 months of any net loss on other residential property. Retirement funds count at 70% (80% for borrowers 59.5 or older); business funds, gifts, and cryptocurrency don’t count at all.
Property type matters too. Warrantable condos can reach 80% on this program; non-warrantable condos step down from there, and condotels sit lower still with tighter cash-out limits. That stack — warrantable, non-warrantable, condotel — is a useful mental ladder for any investor sorting out where their specific building lands. For readers who want the full mechanics of qualifying purely on rental cash flow instead of personal deposits, Lendmire’s complete DSCR loans guide walks through that side of the non-QM world.
Where the General Rule Breaks
Condotels are a harder version of the same problem. They combine non-warrantability with hospitality-style income volatility. Traditional banks and credit unions generally won’t finance condo hotels at all — the risk and overlay requirements are too heavy. If an owner self-manages and has 12-plus months of income history, some lenders in the network will consider it; branded condotels usually rely on the hotel’s own revenue reports instead of the owner’s personal bank statements, which changes the documentation path entirely.
Structural-safety findings are a harder stop than routine HOA disputes. After industry-wide unsafe-building concerns prompted new agency guidance, Fannie Mae drew a bright line: loans on buildings with significant deferred maintenance or a regulatory directive to make safety repairs are ineligible for purchase, under Fannie Mae Lender Letter LL-2021-14. Non-QM lenders aren’t bound by that rule, but most mirror it in practice — ordinary HOA litigation gets priced around; a building under an evacuation or unsafe-conditions order generally doesn’t get touched regardless of the documentation program.
A project can lose warrantable status with no change at the unit level. This matters most for refinances. If a condo was purchased conventionally and the HOA’s finances, insurance, or litigation status changed afterward, the only refinance path left may be a portfolio or non-QM lender — even for a borrower who never had trouble qualifying the first time around.
One pattern shows up again and again in these files. A self-employed borrower with strong, consistent deposits is often the ideal candidate for a non-warrantable building. Why? The project’s risk and the borrower’s risk sit on completely separate ledgers. Strong personal cash flow won’t fix a bad reserve study. But it does mean the lender isn’t fighting two problems at once. That combination tends to move through underwriting with fewer surprises than a thin-file borrower buying the same unit.
The Investor Decision
Non-warrantable status isn’t a flaw to underwrite away with a bigger down payment — it’s a building-level ceiling that follows every unit regardless of the buyer’s balance sheet. That’s worth sitting with before writing an offer, not after.
This isn’t a fringe corner of lending anymore. Two borrower types now dominate non-QM lending: self-employed borrowers using bank statement documentation, and investors who qualify off property cash flow. That’s according to Scotsman Guide. The source also notes that 2024-vintage non-QM loans closed with an average 75% loan-to-value and a 776 average credit score. In other words, this is a mainstream production lane — not a last resort for troubled files.
The resale side deserves equal weight. A non-warrantable condo shrinks the buyer pool at exit, too — if the building’s issue isn’t resolved by the time the investor sells, the next buyer likely needs the same specialty financing. That’s a liquidity discount worth underwriting into the purchase price the same way a vacancy assumption gets built into a pro forma.
Should you use bank statement documentation or look at the property’s cash flow instead? Lendmire’s comparison of DSCR loans versus bank statement loans breaks this down. It shows which number — your personal deposits or the rental income — makes your file stronger. Are you self-employed and buying a resort-area non-warrantable unit? Do you already own property outright? If so, check out Lendmire’s piece on delayed financing through a bank statement program. It covers a related loan structure worth knowing about.
DSCR loans, for context, are designed for non-owner-occupied investment properties. Because they’re business-purpose loans, they get reviewed differently than a standard owner-occupied mortgage.
Key Terms Defined
Bank statement loan: a documentation method that calculates qualifying income from 12 or 24 months of bank deposits instead of traditional personal-income documentation or pay stubs, commonly used by self-employed borrowers.
Condotel: a condo unit operated like a hotel room, often through a management company, which adds rental-income volatility on top of non-warrantable project risk.
Expense ratio: the percentage of gross deposits an underwriter subtracts to estimate a business’s actual operating costs before calculating qualifying income.
Frequently Asked Questions
Can a non-warrantable condo ever qualify for a big loan amount? Yes, through the portfolio and bank programs described above, sizes run from $300,000 to $30,000,000, though leverage steps down significantly as the loan size climbs and everything above $4,000,000 is reviewed case by case before submission.
Does a strong bank statement income override a bad HOA? No — project risk and borrower risk are evaluated separately, and a strong income file doesn’t offset a building with unresolved structural or litigation problems; it typically helps most on projects with milder issues like high investor concentration or elevated commercial space.
Is 24 months of statements always safer than 12? Not necessarily. The right window depends on whether income is trending up or holding steady, and many files get run both ways before a program is chosen.
Do condotels use the same bank statement process as regular condos? Often not — self-managed condotel owners with 12-plus months of income history may use personal statements, but branded condotels frequently document income through the management company’s revenue reports instead.
What happens if a condo loses warrantable status after I already own it? Refinancing may then require a portfolio or non-QM lender, even if the original purchase loan was a standard agency mortgage — the building’s status, not the borrower’s history, drives that outcome.
Investors sorting out whether a specific non-warrantable building fits a bank statement program, an asset-based path, or DSCR lender review can call Lendmire at 828-256-2183 or request a quote to compare structures side by side.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Self-employed borrowers can compare both super jumbo programs on Lendmire’s self-employed mortgages page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 40 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
Lendmire’s Top Mortgage Workplace recognition is documented by Scotsman Guide 2025 Top Mortgage Workplace and Scotsman Guide 2026 Top Mortgage Workplace.
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References
1. Fannie Mae Selling Guide, B4-2.1-03 Ineligible Projects
2. Fannie Mae Lender Letter LL-2021-14
3. Scotsman Guide — “Which groups are driving non-QM lending?”
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.
