Non-warrantable condos
in Myrtle Beach.

The direct answer

What is a non-warrantable condo?

A warrantable condo is one that qualifies for a normal conventional loan, the kind backed by Fannie Mae or Freddie Mac. A non-warrantable condo is one that does not, because the building fails one or more of their project rules. You can still buy it, and you can still finance it. You just use a different type of loan.

This matters more in Myrtle Beach than almost anywhere else, because so much of what people want here is a condo, and a large share of the oceanfront buildings are non-warrantable. If you are shopping condos on the Grand Strand, this is not a rare edge case. It is something you will run into, and it is worth understanding before you fall in love with a unit.

Some reasons behind the label are minor and easy to finance around. One is a hard stop. And one common reason can actually mean you are looking at a good deal. The rest of this page walks through them, what each one costs you, and how to check a building before you commit.

The reasons

Why a Myrtle Beach condo gets classified non-warrantable

The rules come from the Fannie Mae Selling Guide, and lenders check every condo building against them. One failed rule is enough to flag the whole building. Here are the reasons we see most on the Grand Strand.

• ✓Hotel-style operations. A front desk, nightly or weekly rentals, central booking, or units marketed as lodging. This is the condotel trigger, and it covers much of the oceanfront. Full detail on condotel financing.
• ✓Master insurance that no longer meets the rules. A recent Fannie Mae change is pushing many coastal buildings into non-warrantable status right now. This is the fastest-growing reason here, and it gets its own section below.
• ✓Structural litigation. If the HOA is in a lawsuit over the safety or structure of the building, that is the hard stop, and you have to wait for it to finish. More on buying a condo in litigation.
• ✓Weak reserves or unpaid dues. The budget sets aside too little for repairs, or too many owners are behind on their HOA payments. How to read those reserves is on our reserves page.
• ✓Too many investors. One owner holds too many units, or too much of the building is rented rather than owner-occupied. This one is worth a second look, because it is a lending label, not a broken building.
• ✓Too much commercial space, or deferred maintenance. Restaurants and shops past a certain share of the building, or needed repairs the building has not made, a concern regulators tightened after the 2021 Surfside collapse.

These are not all equal. Structural litigation means you wait. But too many investors is a lending problem, not a building problem, and it often comes with a lower price. That can be an opportunity, which we come back to below.

What changed

The insurance rule making more coastal condos non-warrantable

This is the reason catching the most buildings by surprise right now. Every condo building carries one big insurance policy for the whole property, called the master policy. In February 2024, Fannie Mae tightened its rules for that policy. The coverage must be enough to fully rebuild the building. And the deductible, the part the building pays out of its own pocket before insurance pays anything, cannot be more than 5 percent of that rebuild amount.

Put round numbers on it. If a building would cost 20 million dollars to rebuild, its deductible cannot be higher than 1 million dollars. The problem is that beach insurers often refuse to sell storm coverage with a deductible that low. The building takes the only policy it can get, that policy breaks the rule, and Fannie Mae flags the whole building. From that moment, no unit inside it can close with a conventional loan, even units owned by people who did nothing wrong.

Many HOAs have not caught up yet, which is why buildings that financed fine a year ago are being declined today. It is fixable. The HOA can restructure its master policy to meet the rule. Our team has done exactly that in the middle of a deal, working with an association to get its policy rewritten so a purchase could close. You can read how condo insurance works on the coast on our coastal insurance page.

The rules also keep moving. A newer change taking effect in July 2026 softens part of this: the share of the building's deductible tied to your own unit gets capped at 50,000 dollars, and your own small condo policy, called an HO-6, covers that gap. The lesson is simple. Warrantability has to be checked at the time you buy, not assumed from what was true last year.

The loans that work

How to finance a non-warrantable condo

Conventional loans are out, by definition. Government loans, meaning FHA, VA, and USDA, are also out, because they require the building to be on an approved list. What is left is a set of loans that lenders keep on their own books or sell outside the agencies.

• ✓Portfolio loans. The lender keeps the loan and sets its own building rules, so a non-warrantable condo becomes a judgment call instead of an automatic no.
• ✓DSCR loans. The loan qualifies on the unit's rental income instead of your tax returns. A common choice for investors. Full guide: DSCR loans.
• ✓Bank statement and other non-QM loans. Built for self-employed buyers and situations that do not fit the conventional box.

Two honest points about cost. A non-warrantable condo takes a larger down payment than a standard condo, and the interest rate is usually somewhat higher, because the loan cannot be sold to Fannie or Freddie. How much higher depends on why the building is non-warrantable and which loan fits, so the only real number is the one we quote you for your building and your situation.

The good news is that in some cases this path is easier, not harder. If you are self-employed, you may not qualify for a conventional loan anyway. On a non-warrantable condo you would use a bank statement or portfolio loan, which is often the same loan you would need on a warrantable building. In that case, the building being non-warrantable costs you very little.

Our affiliated lender, BrickWood Mortgage, arranges these loans through wholesale lenders that accept non-warrantable buildings. Financing is handled by Devin Day, a licensed mortgage loan originator, NMLS 2721275.

Disclosure. Chapter3 Realty Corp has a business relationship with BrickWood Mortgage (NMLS #189497). Because of this relationship, this referral may provide Chapter3 Realty a financial or other benefit. You are never required to use BrickWood. You are free to shop any lender. See full AfBA Disclosure.

Should you buy one

Is a non-warrantable condo a good buy?

Sometimes it is one of the best buys on the market, and sometimes it is a trap. The deciding factor is, once again, the reason.

A non-warrantable condo is usually cheaper than a comparable warrantable one, for a simple reason: fewer people can finance it, so there is less competition for it. If the building is non-warrantable because of something like heavy investor ownership, and the HOA is healthy and the building is sound, that lower price can be a real advantage. You are getting a discount created by a paperwork label, not by a broken building.

The drawbacks deserve the same attention. Financing is harder, and resale is less liquid, because your future buyer faces the same smaller pool of lenders you did. So the price and the numbers have to make up for that. If the reason it is non-warrantable is a failing HOA, a crippled building, or unresolved structural litigation, walk away. If the reason is minor and the price reflects it, it can be a smart primary home or a strong investment. It is a case-by-case call, and it is exactly the kind of call we help you make. You can run a specific unit through our rental analyzer, or read whether Myrtle Beach condos are a good investment.

Before you offer

How to find out if a condo is warrantable before you make an offer

The expensive mistake is the one that plays out slowly. You make an offer, put down earnest money, pay for an appraisal, and then weeks later the lender discovers the building is non-warrantable and the loan falls apart. Now you have lost time, money, and the home. The whole problem is that this usually surfaces after you are already committed.

The fix is to check the building first. Call Chapter3 Realty before you offer. Our licensed agents can pull the HOA documents that decide warrantability, and our licensed mortgage team reads them and tells you whether the underwriters are likely to rule the building non-warrantable. This usually takes a few days, which is time well spent before you risk your earnest money. Building-by-building notes are also mapped in our oceanfront building directory.

Nobody can guarantee an underwriter's final decision. But reading a building's recent sales gets us there the large majority of the time. If a buyer closed a conventional loan in that building last week, you very likely can too. If we think the building is non-warrantable, we tell you, and then we talk strategy: whether the right move is a different loan, a lower offer, or a different building. We build a whole team around one decision on a 100,000 dollar condo, the same way we would on a two million dollar one. That is the kind of brokerage we are.

A real file

How we kept a buyer from offering on the wrong building

A woman moving to Myrtle Beach wanted a condo near the water. She was buying on Social Security income and had, at most, about 5 percent of the price available for her down payment and closing costs together. That meant she needed an FHA loan, which only works on approved, warrantable buildings.

She was about to make an offer on one specific building. Before she did, the analysis was run on three buildings she was considering. MLS access, which is only available to licensed agents, and calls to listing agents inside the buildings turned up that the one she was about to offer on had recently sold a unit as a non-warrantable condo. That was a strong sign her loan would be classified the same way, which would have made that building unaffordable for her.

So she was advised not to offer there. That decision alone saved her the appraisal fee, her earnest money, and weeks of effort chasing a home she could not have financed. Instead, she made an offer on a different building that qualified, and her financing came through. She got a home near the water that actually worked for her budget, because someone checked before she committed.

Check the building before you offer.

Send the building name. Licensed agents pull the documents, licensed mortgage pros read them, and you get the answer before you risk an offer.

Common questions

Non-warrantable condo FAQ