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TL;DR

  • Warrantability is the lender layer of the three that govern a community-association master policy, alongside state statute and your governing documents. Fannie Mae, Freddie Mac, and FHA each set insurance conditions a condominium must meet to back conforming or FHA financing.
  • The three are largely harmonized: roughly 1,000,000 dollars per occurrence general liability, replacement-cost property coverage, and fidelity/crime for projects over 20 units. Liability lives in Fannie B7-4-01, not B7-3, a reference boards and agents most often get wrong.

Lender warrantability

Condo insurance warrantability requirements: Fannie Mae, Freddie Mac, and FHA side by side.

A condominium is warrantable when it meets the secondary-market and government agency standards a lender checks before it will make a conforming or FHA loan on a unit. Insurance is a core part of that check. The table below sets the property, liability, fidelity, and flood conditions side by side for the three agencies that matter most. Every value is drawn from the agency guide or handbook the requirement lives in, the same primary sources cited across this site.

Educational reference only, not legal, lending, or insurance advice. Agency guides are revised regularly, so confirm the current guide text for the agency purchasing the loan. This is the lender layer only. Pair it with your state requirements and your governing documents, since a master policy has to satisfy all three.

RequirementFannie MaeFreddie MacFHA
General liabilityAt least $1,000,000 per occurrence (Selling Guide B7-4-01, Liability Insurance)At least $1,000,000 per occurrence, parallel to Fannie (Guide Chapter 8202)Commercial general liability covering the common areas and association operations
Fidelity / crime coverageProjects over 20 units: at least 3 months of aggregate assessments plus reserve funds, and it must reach a managing agent handling association funds (B7-4-02)Projects over 20 units: at least 3 months of aggregate assessments plus reserve funds (Chapter 8202)Projects over 20 units: a fidelity or employee-dishonesty bond that also reaches any managing agent handling association funds
Property valuation100% of replacement cost with no coinsurance (B7-3, Property and Flood Insurance)Replacement cost coverage on the project improvements (Chapter 8202)100% of insurable replacement cost on the common elements
Flood (Special Flood Hazard Area)Required for any project building located in an SFHA (B7-3)Required for any project building located in an SFHA (Chapter 8202)Required for any building located in an SFHA
Governing referenceFannie Mae Selling Guide, sections B7-3, B7-4-01, and B7-4-02Freddie Mac Single-Family Seller/Servicer Guide, Chapter 8202 (project eligibility in Chapter 5701)FHA condominium project approval requirements, recertified on FHA cycle, currently every three years

Primary sources: Fannie Mae Selling Guide (sections B7-3, B7-4-01, B7-4-02); Freddie Mac Single-Family Seller/Servicer Guide (Chapter 8202); FHA condominium project approval requirements. A lender reviews to whichever agency is expected to purchase the loan.

The reference boards get wrong

Liability is B7-4-01, not B7-3

The single most common warrantability miscite is placing the general liability requirement in Fannie Mae section B7-3. B7-3 is the property and flood section. The commercial general liability limit sits in its own section, B7-4-01, and fidelity or crime coverage in B7-4-02. Getting the reference right matters, because a lender or a specialty underwriter reviewing the file will check each requirement against its own section, and a letter that cites the wrong one reads as a program that was never actually confirmed against the guide.

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Common questions

Condo insurance warrantability: what boards, CAMs, and lenders ask

Does meeting my state minimum insurance requirement make my condo warrantable?

Not necessarily. Warrantability is a separate lender standard, and it frequently requires more than a state statutory floor. Several states set an 80 or 90 percent property floor, or none at all, while Fannie Mae and Freddie Mac both expect replacement-cost coverage with no coinsurance for a warrantable condominium. A master policy can satisfy the state code and still fail a lender review. Compare your state requirement to the agency standard rather than assuming one covers the other.

What is the difference between Fannie Mae and Freddie Mac condo insurance requirements?

They are substantially harmonized. Both expect commercial general liability of at least 1,000,000 dollars per occurrence, replacement-cost property coverage on the project improvements, and, for projects of more than 20 units, fidelity or crime coverage of at least three months of aggregate assessments plus reserve funds. The two do not word every provision identically, and a lender may review to whichever agency is expected to purchase the loan, so a master policy built to one standard usually meets the other but should be confirmed against the specific agency in play.

Why would a unit sale stall over warrantability?

A conforming or FHA buyer's loan depends on the project being warrantable, and a single insurance gap can break that. The most common are a fidelity or crime bond sized below three months of assessments plus reserves, a property policy written to a state percentage floor rather than full replacement cost, a coinsurance clause, or a missing flood policy on a building in a Special Flood Hazard Area. Any one can make the project non-warrantable, which shrinks the buyer pool to cash and portfolio lenders until it is fixed.

Free coverage review

A specialist will check your master policy against Fannie, Freddie, and FHA warrantability within one business day.

Send your declarations page and any lender warrantability letter or questionnaire. You get a plain-English, requirement-by-requirement read, not a sales call.