Found the right South Beach condo only to hear your lender call the building “non-warrantable”? You are not alone. Many great San Francisco towers fall into this category for reasons that have little to do with the individual unit. In this guide, you will learn what non-warrantable means, why it happens in South Beach, what realistic financing paths look like, the documents lenders will ask for, and how to structure a safe, winning offer. Let’s dive in.
What “non-warrantable” means
A condo building is non-warrantable when it does not meet the project standards of major agencies like Fannie Mae, Freddie Mac, FHA, or VA. When that happens, standard conforming, FHA, or VA loans are usually off the table. You will likely need a portfolio or specialty loan, or in some cases cash.
Expect tradeoffs. Non-warrantable financing often comes with higher down payments, higher interest rates, more documentation, fewer lender choices, and longer timelines. None of this is insurmountable, but it does require planning and the right team.
Why South Beach condos get flagged
South Beach has many high-rise and mixed-use projects, plus complex HOA and insurance profiles. Those factors increase the odds of a non-warrantable call. Here are the common triggers in San Francisco and how they show up locally.
Litigation or construction defect claims
Active lawsuits involving the HOA or developer often disqualify a project from agency approval. In dense, newer towers, retrofit and repair issues are not unusual, so litigation pops up more than buyers expect. Lenders worry about large assessments and insurance questions when a case is unresolved.
Low reserves or budget gaps
Agencies look for realistic budgets and healthy reserves. If the HOA repeatedly relies on special assessments or runs a deficit, risk rises. Older conversions and larger high-rises sometimes underfund reserves given San Francisco’s maintenance and seismic costs.
High rental or investor concentration
Buildings with a large share of non-owner units can be flagged. Investor concentration can affect loan performance and day-to-day upkeep. South Beach attracts investors, and short-term rentals in some areas add another layer for lenders to evaluate.
Commercial or mixed-use components
Retail podiums, hotel tie-ins, or large non-residential areas may push a project outside agency limits. Many South Beach towers include significant commercial space that complicates underwriting.
Single-entity or developer ownership
If a developer or one investor still owns a sizeable block of units, agencies may not approve standard financing. Some newer or phased projects run into this during sellout.
Conversion, short-term rental, or occupancy restrictions
Recent condo conversions, widespread unpermitted short-term rentals, or overly restrictive occupancy rules can cause issues. Lenders want governing documents and city compliance to line up.
Insurance or title gaps
Insufficient master insurance coverage, very high deductibles, or title exceptions can trigger a non-warrantable decision. In larger towers, insurance structure gets complex and lenders look closely.
Your financing options
A smart first step is to confirm whether the building is truly non-warrantable and why. If agency paths are ruled out, here are the realistic alternatives buyers use in San Francisco.
Portfolio loans from local banks and credit unions
Portfolio lenders keep loans on their balance sheets and set their own building criteria. Many will lend on non-warrantable South Beach projects after reviewing HOA details. Rates are typically higher than conforming products, and timelines can run longer as they dig into building docs.
Non-QM and other non-conforming products
These programs serve borrowers who do not fit agency boxes, like self-employed buyers using bank statements or asset-based qualification. They often accept non-warrantable projects but come with higher rates and fees. Expect careful documentation of assets and reserves.
Jumbo loans
South Beach prices often exceed conforming limits, so jumbo may be part of the picture anyway. Many jumbo lenders are portfolio lenders and can be flexible on building issues. Pricing usually reflects the added risk.
ARMs, short-term fixed loans, and bridge options
Lenders sometimes offer adjustable-rate or shorter fixed terms to limit long-term exposure. A bridge loan can help you close now and refinance later if the building’s status improves. This strategy carries refinance risk if conditions do not change.
Private or hard money lenders
Private lenders focus on collateral and can close quickly. The tradeoff is much higher rates, fees, larger down payments, and short terms. This path is best for narrow use cases, not a first choice for most buyers.
Cash purchase
Cash eliminates the financing constraint entirely and can strengthen your offer. It also ties up capital, so consider opportunity cost and post-closing liquidity.
FHA or VA conditional routes
Some buildings can pursue FHA or VA approval, but this is a process that requires HOA cooperation and time. It is rarely a near-term solution for a buyer already under contract.
Rates, down payments, and timelines
Expect a pricing premium over comparable conforming loans for portfolio or non-QM products. The size of that premium varies by lender, your profile, and the building’s specifics. Down payments for primary residences commonly run 15 to 30 percent, and investment purchases often require more. Strong credit scores and healthy cash reserves help your case. Plan for longer underwriting because lenders will review HOA documents, budgets, insurance, and any litigation.
The documents lenders request
Getting ahead on documentation can save days once you are under contract. You will typically need:
- HOA governing documents, including CC&Rs and bylaws
- Current-year HOA budget and 2 to 3 years of historical budgets
- Reserve study or analysis and bank statements showing reserve balances
- 12 to 24 months of HOA meeting minutes
- Master insurance certificates and declarations, including deductibles
- Litigation disclosures and any related correspondence or agreements
- Unit-level estoppel, HOA dues history, and special assessment statements
- Rental and occupancy data, plus any short-term rental registrations
- List of units owned by developer or single entities
- HOA financials, including balance sheet, income statement, and receivables aging
- Any city notices, such as seismic retrofit requirements or code items
A step-by-step plan to move forward
Follow a simple flow to reduce surprises and keep leverage in negotiations.
Step 1: Confirm the reason
Get your lender’s written reason for the non-warrantable flag. Is it litigation, reserves, occupancy, commercial space, developer control, insurance, or something else? Clarity here drives every next decision.
Step 2: Gather the baseline HOA packet
Request the full condo docs checklist early. Having budgets, reserves, insurance, and minutes in hand helps lenders answer yes or no faster.
Step 3: Engage condo-experienced lenders
Speak with local portfolio and non-QM lenders who have recently closed loans in similar SF towers. Ask about down payment ranges, rate structures, and expected timelines for your specific building profile.
Step 4: Align financing with your goals
Define your hold horizon, occupancy plan, and cash tolerance for a larger down payment. If the building’s issue is likely temporary, consider whether a shorter-term loan with a planned refinance fits your risk comfort.
Step 5: Compare pathways side by side
If a portfolio lender can close at an acceptable rate with 15 to 20 percent down, that often beats private lending. If timing is tight and a lawsuit is near settlement, a bridge strategy might be worth a look. Always account for refinance risk.
Step 6: Craft finance-smart contingencies
Use longer financing contingency periods tailored to condo reviews. Consider seller-paid HOA estoppel fees and clear allocation of any known or pending special assessments. Spell out what happens if a targeted lender path fails.
Step 7: Set a backup plan
Prequalify more than one lender path. Have a private lending or cash alternative mapped out if timelines tighten or underwriting shifts late.
Step 8: Monitor after closing
If you plan to refinance, track HOA improvements, reserve increases, and litigation milestones. Keep your documentation current so you can act when conditions improve.
Red flags to watch
- High-dollar, unresolved litigation that could trigger large assessments
- Reserve balances far below recommended levels for the building’s age and size
- Significant HOA dues delinquencies
- Major commercial components or hotel tie-ins with separate ownership interests
- Ongoing developer control or large single-entity ownership with unclear transfer plans
- Insurance gaps or very large deductibles
- Structural or safety issues likely to require extended repair timelines
South Beach realities and strategies
- Prices and loan sizes: Many transactions exceed conforming limits. Expect jumbo or portfolio financing even when buildings are otherwise strong.
- Building types: High-rise and mixed-use towers are common and often present commercial components, complex insurance, and more detailed reserve needs.
- City overlay: Local rules on short-term rentals, seismic retrofit, and tenant protections can affect occupancy patterns and HOA decisions, which lenders consider.
- Lender appetite: Regional banks, credit unions, and local portfolio lenders may be more open to South Beach projects than national channels, but each lender’s appetite changes over time.
Make your offer finance-smart
Offer terms can protect you while keeping your bid competitive. Ask for a financing contingency long enough to complete building-level underwriting. Request timely access to the full HOA packet and consider seller participation in estoppel or document fees. Where appropriate, address known assessments upfront so there are no surprises at closing.
If you are weighing an ARM or bridge, model the payment at the first adjustment and set clear refinance targets. Keep appraisal timing in sync with lender doc review to avoid bottlenecks.
After you own: position for refinance
If your goal is to refinance into a lower-cost loan later, treat the HOA like a key partner. Monitor budgets, reserve studies, insurance updates, and any litigation status changes. Save board minutes and notices that show improved reserves, reduced deductibles, or resolved claims. Lenders look for proof.
When conditions improve, refresh your credit profile, confirm current loan products, and gather the latest HOA docs before you apply. Preparation shortens the path to better terms.
Ready to move forward on a South Beach condo with a clear, practical plan? Our team focuses on urban San Francisco condos and helps buyers coordinate the pieces that matter most in non-warrantable buildings, from document strategy to finance-smart offers. Start a conversation with Madison Hunter to map your next steps.
FAQs
What does “non-warrantable” mean for a South Beach condo?
- It means the building does not meet agency standards for condo projects, so standard conforming, FHA, or VA financing is usually unavailable and you will likely need a portfolio or specialty loan.
Why are so many high-rise South Beach condos non-warrantable?
- Common triggers include active litigation, low reserves, high investor concentration, mixed-use components, single-entity ownership, conversion issues, or insurance gaps, all of which are more common in dense urban towers.
What down payment should I expect on a non-warrantable purchase?
- Many portfolio lenders look for 15 to 30 percent down on primary residences, and more for investment purchases, with strong credit and cash reserves preferred.
How long does underwriting take for a non-warrantable condo in SF?
- Timelines are often longer than standard loans because lenders review HOA budgets, reserves, insurance, litigation, and occupancy data in detail before issuing final approval.
Which documents will my lender ask for from the HOA?
- Expect CC&Rs and bylaws, current and historical budgets, reserve study and balances, insurance certificates and deductibles, meeting minutes, litigation disclosures, estoppels, occupancy data, and financial statements.
Can I refinance later if the building’s status improves?
- Yes, many buyers use a portfolio or ARM solution now and refinance when litigation resolves, reserves strengthen, or insurance improves, but you should plan for refinance risk and track HOA progress.
