The building gets underwritten too
A condo loan has two borrowers: you and the association. The lender reviews the building’s budget, reserves, insurance, occupancy mix, and any litigation before it approves the unit. This has always been true, but since the Surfside collapse in 2021 Fannie Mae and Freddie Mac also require lenders to screen for critical repairs, significant deferred maintenance, and unsafe conditions. A building with a failed inspection or an evacuation order is ineligible until it’s fixed.
In Philadelphia that matters in Old City warehouse conversions, Society Hill mid-rises from the 1960s, and any building with a facade the Department of Licenses and Inspections has opinions about. It also reshapes the process. Until this month, a low-LTV conventional loan could use a Limited Review that skipped most of the building questions. For applications on or after August 3, 2026, that’s gone. Any project with more than 10 units gets a Full Review regardless of your down payment. Buildings of 10 or fewer units get a simpler waiver, which covers most of the converted rowhomes and trinities that were carved into two or three condos.
Warrantable in 2026
A building is warrantable when it passes the Fannie and Freddie project standards. The current tests, in the order they most often fail in this city:
- Reserves. At least 10% of the annual budget going to reserves. For applications on or after January 4, 2027, that rises to 15%, unless a reserve study under three years old funds at its highest recommended level.
- Delinquencies. No more than 15% of units 60 or more days behind on dues.
- Concentration. No single entity owning more than 20% of the units in a project of 21 or more units. The old 50% cap on investor-owned units was eliminated March 18, 2026, which helps a lot of University City and Temple-area buildings.
- Commercial space. No more than 35% of the building.
- Insurance. Master policy with replacement-cost coverage, and for applications on or after July 1, 2026, a per-unit deductible no higher than $50,000. Actual-cash-value roof coverage is now accepted.
- Operations. No hotel-style rentals, mandatory rental pools, or timeshare arrangements.
- Litigation. Nothing involving safety, structure, or habitability.
- New projects. At least 50% of units conveyed or under contract to owner-occupants.
Fail any of these and the building is non-warrantable. The unit can still be financed, through a portfolio or non-QM lender, generally with a bigger down payment and a rate the lender will estimate for you.
FHA and the short Philly list
FHA insures condo loans in two ways: a building holds project approval, valid for three years, or an individual unit gets Single-Unit Approval in a building that doesn’t. Project approval requires at least 50% owner-occupancy (35% with extra conditions), commercial space at or under 35%, no more than 15% of units 60 days delinquent, and at least 10% of the budget to reserves. The approval process falls on the association, and most Philadelphia associations haven’t bothered.
The result is that only a small number of Philadelphia buildings hold current FHA approval. Single-Unit Approval is the usual route. It works in completed buildings of five or more units, and FHA caps its share at 10% of the units in a project of 10 or more, or two units in a smaller one. If a building already has its FHA units, you’re out until someone refinances. The 2026 FHA limit for a single unit in all five counties is $630,200. The FHA page has the rest.
Philly First Home, the city’s grant of up to $10,000 for first-time buyers, doesn’t cover condominiums. Single-family homes and duplexes only. If that $10,000 is the down payment, a condo takes it off the table, and nobody mentions it until the counselor does.
The HOA documents and who pays for them
The lender’s condo questionnaire goes to the property manager, who typically charges a fee to fill it out. Expect the lender to want the questionnaire, the current budget, the most recent reserve study if there is one, the master insurance declarations, the bylaws and declaration, and a statement on any litigation. Slow managers are the number one reason a Philly condo closing slips a week. Ask the listing agent on day one who manages the building and how fast they turn a questionnaire.
Pennsylvania’s title insurance comes from a statewide rate manual, so the title premium on a $400,000 unit is about $2,735 anywhere in the state. The closing costs guide has the rest of the sheet.
Center City, University City, and the suburbs
Rittenhouse and Logan Square high-rises are mostly warrantable, and above the $832,750 conforming limit they become jumbo loans, which run their own building review. Society Hill’s 1960s towers and Old City’s loft conversions are where reserve and insurance questions bite. Fishtown and Northern Liberties new construction comes with the phase-down abatement, 100% of improvement value in year one dropping 10 points a year, so the escrow rises every year you own it. University City buildings near Penn and Drexel used to trip the investor-concentration cap, which no longer exists. The Center City page covers the buildings block by block.
In Conshohocken and King of Prussia the new condo and townhome stock is young enough that reserves are the usual question, and the transfer tax is 2% instead of 4.578%. One more thing a local will tell you: a Center City trinity is a house on a tiny lot with a spiral staircase, and it’s financed like a house unless someone recorded a condo declaration on it.
Start with one call
Give us the building’s name and the unit price. We’ll put you with a lender who knows how to get the questionnaire back before your mortgage contingency runs out, warrantable or not. Call us.