Buying and Financing a Condo or Loft

Financing a condo or loft is not like financing a house. Your lender doesn't just underwrite you; it also reviews the whole building. A buyer with strong credit can still hit a wall because the project doesn't meet the loan program's standards. Knowing that early can save a deal from falling apart late.

This guide explains how condo lending rules work as of 2026. It isn't mortgage advice. Rules change, and your lender will apply the current version to your specific loan.

Warrantable vs. non-warrantable

Most conventional lenders sell many of their loans to Fannie Mae or Freddie Mac. Those agencies only buy condo loans in projects that meet their standards. A project that meets them is called warrantable; one that doesn't is non-warrantable (these are industry terms, not official agency ones).

Common reasons a project comes up non-warrantable:

One owner holding too many units: for Fannie Mae, more than 2 units in a 5 to 20 unit building, or more than 20% of units in larger ones. Freddie Mac allows up to 25%; FHA generally caps a single owner at 10%.
Too much commercial space: more than 35% of the building's square footage (FHA can allow up to 49% by exception).
Thin reserves: the budget sets aside less than 10% for reserves (rising to 15% for loan applications on or after January 4, 2027), unless a reserve study from the last 3 years supports a different amount.
Delinquent dues: more than 15% of units 60 or more days behind on their assessments.
Litigation about the building's safety or structure. Minor, insured claims usually don't disqualify a project.
Critical repairs: buildings that need critical safety or structural repairs are ineligible until the work is done.
New construction where fewer than half the units have sold to owner-occupants or second-home buyers.
Hotel-style operations: projects run like a hotel, with transient rentals, are ineligible for conventional loans.

What about a building full of renters? A high investor or rental share is no longer a Fannie Mae or Freddie Mac test for established buildings (that rule was dropped in March 2026). But FHA still wants at least 50% of units owner-occupied, new projects still face the presale rule above, and some lenders keep their own limits.

Loft conversions can get caught by these rules: few units, ground-floor commercial space, and small associations with thin reserves. So ask "Is this project warrantable?" before you get attached to a unit.

The loan types and how each treats condos

Conventional (Fannie Mae and Freddie Mac): the association fills out a condo questionnaire and the lender reviews the project. For loan applications on or after August 3, 2026, that means a full review for most buildings, while small buildings of 2 to 10 units can often skip project review. Only warrantable projects qualify.
FHA: the project generally needs to be on FHA's approved condo list. Approval lasts 3 years. Approved buildings must be at least 50% owner-occupied, and no more than half the units can carry FHA loans. FHA loans allow a lower down payment (as low as 3.5% with a qualifying credit score), but the project rules are stricter.
FHA single-unit approval: possible when the building isn't FHA-approved, has at least 5 units, has been occupied or had its certificate of occupancy for at least a year, is at least 50% owner-occupied, and has few FHA loans (no more than 10% of units). Approved buildings are searchable at HUD's condo lookup.
VA: for eligible veterans and service members, the condo project must be VA-approved. VA has no single-unit approval; check VA's condo report at lgy.va.gov.
Non-warrantable and portfolio loans: when a project doesn't qualify, some lenders keep the loan on their own books. Expect a bigger down payment (commonly 10% to 25% or more depending on the lender and occupancy), a higher rate, and more paperwork. These loans exist; they just cost more.
Co-ops: you finance with a share loan secured by your shares and proprietary lease rather than a traditional real-estate mortgage. Fewer lenders offer them.

What lenders look at in the building

The association or its manager completes the lender's condo questionnaire, and the lender weighs the answers: the budget and reserves, any reserve study, delinquent dues, single-owner concentration (and owner-occupancy for FHA), commercial space, litigation, and insurance.

Since the 2021 Surfside collapse in Florida, Fannie Mae and Freddie Mac have required lenders to screen for critical repairs and deferred maintenance. In 2026 they also tightened reserve-study rules: for applications on or after August 3, 2026, a study used instead of the percentage test must be no more than 3 years old, and the budget must fund its highest recommended amount.

At the 710, 720 & 730 Lofts, three buildings share one master condominium, so the shared budget is what a lender sees. Condo-hotel buildings such as IVY Residences can draw extra lender scrutiny.

How it affects your numbers

Dues count in your debt-to-income ratio. Lenders include association dues in your monthly housing payment, so higher dues reduce how much you can borrow.
Special-assessment risk can worry a lender and hit your budget. Thin reserves are a double problem: financing now and bills later.
Down payment may be higher for non-warrantable projects or investment purchases.
Insurance: lenders require adequate master coverage, and since mid-2026 Fannie Mae and Freddie Mac require an HO-6 policy whenever the master policy doesn't cover your unit's interior or has a per-unit deductible. As of July 1, 2026, that per-unit deductible can't exceed $50,000 for those loans.

A buyer's game plan

Get pre-approved, and tell the lender up front that you're shopping for a condo or loft.
Ask early: is the project warrantable, FHA-approved, or VA-approved? Are there pending special assessments or lawsuits? You can check FHA status at HUD's condo lookup and VA status at VA's condo report.
Get the association documents (declaration, budget, reserve study, recent minutes; see the HOA guide) and send them to your lender quickly.
If the project is non-warrantable, ask your lender about portfolio options and what they'd mean for your down payment and rate.
Re-run your budget with dues included, plus a cushion for a possible assessment.

Buying in Minnesota: your resale documents and 10-day window

Minnesota's Common Interest Ownership Act (chapter 515B) gives condo buyers specific rights:

Resale disclosure certificate: when an owner sells, the seller must give you the declaration, articles, bylaws, rules, and a resale disclosure certificate from the association, dated within 90 days, before you sign a purchase agreement (or otherwise before closing). It lists dues and unpaid charges, special assessments and big expenses approved for this year and the next two, what the association must replace and what it holds in reserves, the budget and latest financials, lawsuits, insurance, and known violations. You aren't liable for unpaid assessments left off the certificate.
10-day right to cancel: if you receive those documents less than 10 days before signing, Minnesota law generally gives you 10 days after receiving them to cancel without penalty, as long as you haven't closed. A seller can't require you to waive that right in the purchase agreement.
New construction or a fresh conversion: buying from the developer, you get a disclosure statement instead, with a similar 10-day cancellation right.
Older condos count too: these resale rules also apply to condos created under Minnesota's older condo laws, which covers many pre-1994 loft conversions.
Minneapolis inspections: the city's Truth in Sale of Housing evaluation applies to houses, duplexes, townhouses, and first-time condo conversions, not to ordinary condo resales.

Browse verified Minneapolis buildings in our Minneapolis guide.

Frequently asked questions

Why can a condo loan be denied when my credit is fine?

Because the lender also reviews the building. If the project fails the loan program's standards (thin reserves, too many units owned by one investor, too much commercial space, serious litigation, or unfinished critical repairs), the loan may not qualify even with strong credit.

Does a high number of renters make a condo non-warrantable?

Not for Fannie Mae or Freddie Mac in established buildings anymore; they retired their 50% owner-occupancy test in March 2026. FHA still requires at least 50% owner-occupancy, new projects must meet presale requirements, and some lenders apply their own limits, so the rental mix can still matter.

How do I find out if a condo is FHA or VA approved?

Search the building at HUD's FHA condo lookup and VA's condo report. A unit in a building that isn't FHA-approved may still qualify through single-unit approval; VA has no single-unit option. Your lender will confirm the status.

What reserve level do lenders look for?

For Fannie Mae and Freddie Mac, the association's budget generally needs to put at least 10% of assessment income toward reserves, rising to 15% for applications on or after January 4, 2027. A reserve study no more than 3 years old can be used instead if the budget funds its highest recommended amount.

Can I cancel a Minnesota condo purchase after reviewing the association documents?

Generally, yes, if you received the resale disclosure certificate and governing documents less than 10 days before signing. Minnesota law then gives you 10 days after receiving them to cancel without penalty, as long as you haven't closed. Some transfers are exempt, so confirm with your agent or attorney.

Sources: Fannie Mae Selling Guide B4-2.1-01, B4-2.1-03, B4-2.2-02, B3-6-02, Freddie Mac Bulletin 2026-C, HUD FHA condo lookup, VA condo report, 38 CFR 36.4360, Minn. Stat. 515B.4-107, 515B.4-108, 515B.4-106, 515B.1-102, Minneapolis Truth in Sale of Housing.