The Quick Read: Often yes, because a bank statement loan sits outside the agency box, so the building is reviewed on the lender’s terms instead of Fannie Mae’s. The borrower’s deposits and the building are underwritten separately, and both have to pass. Through select wholesale programs, subject to full underwriting, a non-warrantable condo typically tops out at 80% LTV.
- Non-warrantable describes the building, not the borrower’s credit or income.
- Bank statement income is a tool for primary homes, second homes and business-purpose files, depending on program.
- Typical network figures: 660 credit floor on the portfolio program, DTI to 50%, 12 or 24 months of statements.
- A pure rental purchase often runs better on DSCR, where the rent against the payment decides the file.
- Condotels and hotel-style projects are the hardest category and sit at lower leverage.
The rest of this piece covers the two reviews, the building triggers that matter, the document pull, and what to do when a building fails.
What Does “Non-Warrantable” Actually Mean?
Non-warrantable means the condo project does not meet Fannie Mae and Freddie Mac standards, so loans on its units cannot be sold to them. It is a label on the building. Your credit, your income and your down payment are not part of it.
Fannie Mae publishes its list of ineligible project characteristics. It includes timeshare and fractional ownership, resort and condo-hotel markers, and projects tied to certain pending litigation. The 2025 version of that guide also lists mandatory rental pooling and a 35% cap on commercial space. Those are the agency’s rules. They matter here only as a contrast, because a bank statement loan is non-QM and is not bound by them.
Status gets re-tested on each application. A building approved last year can fail this year if reserves, delinquencies or litigation changed. Plan on that.
Why Can a Bank Statement Loan Work on These Buildings?
A bank statement loan is held by the lender or sold to non-agency investors, so the lender sets its own project rules. Many programs accept buildings the agencies reject. Each program draws the line in a different place, and that is where a broker earns the fee.
Trade press says the same thing. Scotsman Guide reports that non-QM loans finance properties conforming lenders typically avoid, including condotels and non-warrantable condos.
Across the wholesale network, the pattern is consistent. Some programs take almost any non-warrantable reason short of a hotel-style operation. Others pass on active litigation or critical repairs. The strictest overlays want a clean project and a clean borrower at once. Matching the building to the right program before submission is most of the work.
Two Reviews, Running Side by Side
Every file has a borrower review and a building review. They run in parallel, and either one can hold the file up.
| Factor | Borrower review | Building review |
|---|---|---|
| What is checked | Deposits, credit, DTI, reserves | HOA finances, litigation, ownership mix |
| Who supplies it | The borrower | HOA or management company |
| What slows it | Unexplained deposits | Slow HOA, missing documents |
| Typical fix | Letter of explanation, more months | Updated questionnaire, cure period |
In practice the building review is the one that stalls. Borrowers can control their own statements. They cannot control a management company that takes weeks to return a questionnaire. Order the HOA documents the day the contract is signed, not after the borrower file is done.
Which Building Problems Matter Most?
Not all failures are equal. A condo with a high share of investor-owned units is a different risk from one in active structural litigation. Program tolerance for the first is typically much wider than for the second.
| Trigger | Why lenders care | How fixable |
|---|---|---|
| High investor concentration | Fewer owners paying dues | Often accepted at lower leverage |
| Single-entity ownership | One owner’s default hits the budget | Program-specific |
| Commercial space | Income not tied to residents | Often accepted if limited |
| Pending litigation | Cost and outcome unknown | Depends on the claim |
| Failed safety inspections | Special assessments likely | Hard until repairs are done |
| Condotel or rental pool | Hotel-style operation | Lower leverage, fewer programs |
Agency standards treat a project that fails mandatory state or local safety inspections as ineligible. Non-QM lenders usually treat it the same way in practice, or demand proof of completed repairs. Fixable triggers get a path. Structural ones usually do not.
Short-term-rental rules can vary by city, county, HOA and property type, so investors should confirm local rules before relying on projected rental income. HOA rental caps and minimum lease terms also change the rent a lender will count.
How Does Bank Statement Income Work on This Property?
Qualifying income is eligible deposits divided by the number of statement months, after an expense ratio. The program uses 12 or 24 consecutive months of personal or business statements. The bank portfolio program uses 12.
For business statements, the borrower needs at least 25% ownership. Expense ratios are fixed at 20% for a service business with no employees, 40% for one to five employees, and 50% for six or more employees or any product business. An accountant-provided ratio works too, or a profit-and-loss method capped at 80%. Transfers from the borrower’s own business into a personal account count at 100%.
Statements must be consecutive. Transaction histories do not substitute. Large unexplained deposits that are not business revenue get stripped out, so explain them before the lender asks.
Through select wholesale programs, subject to full underwriting, the network figures look like this:
- Credit floor of 660 on the portfolio program, 680 on the bank portfolio program, and 700 above the super-jumbo line.
- DTI up to 50%.
- Reserves of 3 months to $500,000, 6 months to $1,500,000, and 9 months above that, plus 2 months for each additional financed property up to a 12-month maximum. First-time investors need 12 months.
- Non-warrantable condos to 80% LTV, warrantable condos to 85%.
- Condotels at 75% on a purchase and 65% on a cash-out (50% on the bank program). Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Every loan above $4,000,000 is reviewed case by case before submission, whatever the building. Texas 50(a)(6) loans take a 5-point LTV reduction.
Does Occupancy Change the Answer?
Yes. Bank statement loans qualify the borrower on deposits, so they fit primary residences, second homes and business-purpose files, depending on the program. Second homes are one-unit only.
Leverage depends on the occupancy ladder, and you take the figure from that ladder alone. On a purchase at $300,000 to $1,000,000, through select wholesale programs, the best cell is 90% on a primary residence, 85% on a second home and 85% on an investment property. Non-warrantable status then caps any of those at 80%. Above $1,000,000 the ladders step down. Never read a primary-residence figure as an investment-property figure.
A pure rental purchase usually moves to DSCR. That path qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, and HOA dues count against the coverage ratio. Some DSCR lenders only touch warrantable condos, while others lend on non-warrantable projects depending on how they source capital, per Scotsman Guide. Select lenders in the network offer programs below 1.00 coverage, with LTV and terms adjusting. The complete DSCR loans guide walks through that path.
Where HOA rental restrictions make the rent uncertain, a personal-income path can be cleaner. Self-employed buyers with strong deposits and a rental-capped building are the usual fit.
The Process, Step by Step
1. Screen the building before the offer. Request the HOA budget, reserve study, meeting minutes, insurance certificates and litigation disclosure. These are the documents project reviewers rely on, as Fannie Mae’s condo guidance shows.
2. Pick the program to match the building. Match the building’s trigger to a program’s tolerance. A broker who sees many lenders’ guidelines can do this before anything is submitted.
3. Order the HOA questionnaire immediately. The questionnaire and project documents are the usual bottleneck. Completeness matters more than anything else on this step.
4. Build the borrower file in parallel. Pull 12 or 24 consecutive months of statements, flag odd deposits, and document ownership if business statements are used.
5. Submit both halves together. A file with a finished borrower package and a missing building package waits on the building.
6. Clear the appraisal. It is a standard condo appraisal. Condos with limited comps can need a reconsideration packet with recent in-building sales.
A Worked Example
Picture a self-employed physician buying a one-bedroom second home in a resort-area building where investors own a large share of the units. The building fails the agency box on investor concentration alone. Her deposits support the income. The file runs as a second-home purchase in the $300,000 to $1,000,000 band, where the ladder’s best cell is 85%, and non-warrantable status caps leverage at 80%. She needs a credit score that supports that leverage cell and reserves at the 3-month level. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
The borrower side is clean. The building side depends on whether the program tolerates the investor mix. The deal works only if both pass. Figures here are illustrative and subject to underwriting.
When the Building Is the Problem
If the building fails review, there are five realistic moves:
- Switch programs. Another program may tolerate the same trigger.
- Put more down. A lower-leverage cell can widen the options.
- Wait for a cure. Some triggers, like a settled lawsuit or completed repairs, clear on their own.
- Change the income path. If the issue is rent restrictions, move from DSCR to bank statements, or the reverse.
- Pick another unit or building. Sometimes a more affordable fix.
Status can also change mid-file. A new assessment, a shift in investor concentration or a newly filed lawsuit can flip a building after submission. Ask the HOA about pending changes before you sign.
Common Mistakes
- Assuming the building was approved because a neighbor closed there. Status is re-tested per loan.
- Treating non-warrantable as a credit problem and walking away.
- Submitting statements with large unexplained deposits.
- Leaving the HOA questionnaire until the borrower file is finished.
- Planning rental income without reading the HOA’s lease rules.
- Reading a primary-residence leverage figure as an investment-property figure.
Agency rules also move. One HOA-compliance publisher says Fannie Mae’s reserve requirement is scheduled to rise from 10% to 15% for later applications. The agency contrast is a moving target, which is one more reason bank statement programs hold their own rules. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Key Terms Defined
Non-warrantable condo: a condo project that does not meet agency standards for loan sales.
Bank statement loan: a non-QM loan that is reviewed on deposits instead of traditional personal-income documentation, subject to lender guidelines.
Expense ratio: the share of business deposits removed to estimate usable income.
Condotel: a condo operated like a hotel, often with daily rentals and a rental pool.
HOA questionnaire: the project form a lender sends to the association to review finances and litigation.
Frequently Asked Questions
Does a non-warrantable condo cost more to finance?
Typically yes. Expect tighter equity and reserve requirements than on a warrantable condo. Non-warrantable units top out at 80% LTV through select wholesale programs, versus 85% for warrantable ones. Pricing is set by the lender and varies by file.
Can I use FHA or VA on a non-warrantable condo?
Usually not. Government-backed retail financing depends on project approval, and a non-warrantable building often fails it. That does not close the door on non-QM options, which review the building on their own terms.
Are condotels and short-term rentals eligible?
Condotels are the hardest category. Through select programs they sit at 75% on a purchase and 65% on a cash-out, and 50% on the bank program. Hotel-style markers like daily rental advertising and rental pools narrow the field. Short-term-rental rules vary by city, county, HOA and property type.
Does a bank statement loan skip income verification?
No. The lender still verifies the deposits it relies on. Qualification runs on documented income under the applicable program, subject to lender guidelines, and the bank statements are the documentation.
Is a bank statement loan better than DSCR for a condo rental?
It depends on the HOA. DSCR fits a pure rental where the rent clearly covers the payment. A bank statement path can be cleaner when HOA rental caps make the rent uncertain, and the borrower is self-employed with strong deposits.
If you are financing a condo on business or personal bank statements and want to see how the numbers work, Lendmire can help you compare bank statement options based on your deposits, the building, credit profile, leverage, and your goals. Lendmire is a mortgage broker that arranges financing through select lenders in its wholesale network, 41 markets including Washington, D.C. on the investor side and consumer lending licensed in 16 states. Nothing here is a commitment to lend.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B4-2.1-03 (current)
2. Fannie Mae Selling Guide B4-2.1-03 (2025 version)
3. Scotsman Guide, non-QM growth
4. Scotsman Guide, “Get in the Game”
5. Fannie Mae’s reserve requirement
This article is part of Lendmire’s super jumbo bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Can Authors Borrow With a Bank Statement Loan? · How Much Can Influencers Borrow With a Bank Statement Loan? · How a Bank Statement Jumbo Loan Works in Telluride
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.