Thinking about a condo near Houston’s Galleria and unsure how financing works? You are not alone. The biggest hurdle is often whether the building is “warrantable” or “non‑warrantable,” and that status can change your loan options, rate, and down payment. In a few minutes, you will understand what these terms mean, why some Galleria buildings get flagged, and how to move forward with confidence. Let’s dive in.
Warrantable vs. non‑warrantable, in plain English
A condo is usually called warrantable when it meets the project standards set by Fannie Mae and Freddie Mac. Lenders rely on tools like Fannie Mae’s Condo Project Manager to confirm a project’s status. If a project shows “Unavailable,” conventional financing that can be sold to the GSEs is typically off the table, which narrows lender choices and can raise costs. You can read how lenders check status in Fannie Mae’s Condo Project Manager guidance and the Selling Guide on ineligible projects.
How lenders decide a building’s status
Key GSE requirements lenders review
GSE project reviews look at the health and risk of the entire association, not just your unit. Common checkpoints include:
- HOA assessment delinquencies. Many reviews cap 60+ day delinquencies at about 15 percent of units. See Fannie Mae’s Full Review process.
- Single‑entity ownership. A single owner holding too many units can be a red flag. Fannie’s ineligible projects page outlines limits.
- Commercial space. Mixed‑use buildings that exceed non‑residential square footage caps can be ineligible. Refer to Fannie’s ineligible projects.
- Reserves. HOAs are typically expected to budget at least 10 percent of assessments to reserves or otherwise show adequate funded reserves, per Freddie Mac’s condo FAQ.
- Insurance. The master policy usually must provide 100 percent replacement cost and meet deductible limits. See Fannie Mae’s master insurance requirements.
- Litigation and critical repairs. Lawsuits that threaten solvency or unresolved safety or structural issues can make a project ineligible. See Fannie’s ineligible projects.
FHA and VA work differently
- FHA. FHA keeps an approved condo list and also allows many buyers to seek a Single‑Unit Approval in a project that is not fully approved, subject to limits on occupancy, reserves, commercial space, and concentration. Learn more on HUD’s FHA condominium page.
- VA. VA loans generally require the entire condominium project to be VA‑approved. VA does not offer FHA‑style spot approvals. See the VA Lender’s Handbook, Chapter 16, on the VA site here.
Why some Galleria condos get flagged
The Galleria and Uptown area include many luxury high‑rises and mixed‑use properties. In urban towers, the most common issues are:
- Deferred maintenance or major system repairs that are unfunded.
- Insurance shortfalls, high deductibles, or policies that do not meet replacement‑cost standards. See Fannie’s insurance rules.
- High investor or short‑term rental concentration compared to owner occupants.
- Single‑entity ownership concentration that exceeds GSE limits.
- Commercial space that pushes the building past mixed‑use thresholds.
- Active litigation or large special assessments without a clear plan. See Fannie’s ineligible projects.
What this means for your loan and offer
If a building is non‑warrantable, conventional loans that conform to GSE standards are often not available. That can mean fewer lenders, higher rates, and larger down payments. FHA may still work via its Single‑Unit Approval pathway if the project and unit meet HUD’s rules, while VA buyers typically need the project to be on the VA‑approved list. Review FHA details on HUD’s condo page and VA requirements in the VA Handbook.
Financing options if the condo is non‑warrantable
Portfolio and non‑QM lenders
Regional banks, credit unions, and specialty lenders sometimes keep loans in portfolio or use non‑QM programs for non‑warrantable condos. These often require higher down payments, stronger credit, and carry higher rates. See an example of program expectations from NASB’s non‑warrantable condo overview.
FHA Single‑Unit and VA approvals
- FHA can insure a loan on an individual unit in many non‑approved projects if Single‑Unit Approval criteria are met. Details are on HUD’s FHA condominiums page.
- VA requires full project approval, so check the building’s VA status early using the VA Handbook as a guide.
Other paths to consider
- Cash purchase to sidestep lender requirements.
- Seller financing or temporary carryback if permitted by the HOA and agreed to by the seller.
- Short‑term bridge or hard‑money financing as a stopgap, with caution on cost and terms.
Step‑by‑step checklist for Galleria buyers and sellers
For buyers and buyer agents
- Request the HOA resale certificate and documents right away. Texas law outlines what must be provided and helps you verify dues, assessments, litigation, and budgets. Start with Texas Property Code Sec. 82.157 on resale certificates.
- Ask your lender to check Fannie Mae’s CPM status early. If a project is “Unavailable,” conventional financing may not work. See Fannie’s CPM overview.
- Review HOA financials and insurance. Request the budget, delinquency report, reserve study, and master insurance declarations. Fannie’s Full Review process outlines what lenders look for.
- If using FHA or VA, verify the project’s status and whether FHA Single‑Unit Approval is possible. Visit HUD’s condo page and the VA Handbook.
For sellers and listing agents
- Order the resale packet early and ensure records are accessible under Texas association record rules. See Texas Property Code Sec. 82.114 on association records.
- Work with the HOA to confirm the master insurance policy meets replacement‑cost and deductible requirements. Refer to Fannie’s insurance standards.
- Disclose known issues, like litigation or special assessments, early so pricing and buyer financing can be aligned with reality.
For HOA boards and managers
- Maintain strong reserves, target at least 10 percent of assessments for reserves when feasible, keep delinquencies low, and meet replacement‑cost insurance standards. Freddie Mac’s condo FAQ explains lender expectations.
- Keep records organized and respond promptly to resale requests in line with Texas Property Code requirements. See association records guidance.
- If you plan to pursue FHA or VA approval, or to correct an unfavorable GSE status, coordinate with management and your insurance and legal advisors before reapplying.
The bottom line for Galleria condo shoppers
Do not assume a Galleria tower is automatically warrantable. Verify early, line up the right financing path, and use the HOA documents to spot red flags. With a clear plan and the right team, you can negotiate from a position of strength and close without surprises.
If you want a local guide who will help you confirm project status, align financing, and negotiate the best path forward, connect with Shad Bogany. Our team pairs decades of Houston condo experience with lender and HOA know‑how so you can buy with confidence.
FAQs
What makes a Galleria condo “warrantable” to lenders?
- Lenders check whether the association meets GSE standards on items like delinquencies, reserves, insurance, litigation, and ownership concentration. See Fannie’s ineligible projects overview.
How can I check if a building allows FHA financing?
- Look up the project on HUD’s condo page or ask your lender about FHA Single‑Unit Approval for your specific unit. Start with HUD’s FHA condominium guidance.
Can I use a VA loan on a non‑approved Galleria condo?
- Usually no. VA generally requires the entire project to be VA‑approved. Your lender can confirm status using the VA Handbook.
What down payment is typical for non‑warrantable condo loans?
- Many portfolio and non‑QM options ask for larger down payments and higher credit scores. Program examples like NASB’s non‑warrantable overview illustrate common expectations.
Which HOA documents should I review before making an offer?
- Ask for the resale certificate, budget, reserve study, delinquency report, insurance declarations, meeting minutes, and any litigation or special assessment notices. Texas Sec. 82.157 covers resale certificates.
