Non-Warrantable Condo Financing in Scottsdale: Why the Building Gets Declined and How the Loan Still Closes

You were pre-approved. Then you went under contract on a condo in Old Town and the loan quietly died.

Nobody gave you a straight answer. Your income did not change. Your credit did not change. Your down payment did not change. The same lender who pre-approved you three weeks earlier now will not do this loan, and the explanation you got was something vague about waiting on HOA documents.

Here is what actually happened, and it has nothing to do with you. It is the project that failed, not the buyer.

Conventional agency financing requires a condominium project to be warrantable, meaning it satisfies a list of conditions about the building and the association. Fail any one of them and the unit becomes unfinanceable by most lenders, regardless of your income, credit or down payment. Non-warrantable condo programs exist precisely for those projects.

What makes a project non-warrantable

From CMG Financial's Prime Conforming Non-Warrantable Condo guidelines (NMLS #1820), a project qualifies for the program when at least one non-warrantable characteristic is documented. The common ones in Scottsdale:

Commercial space. Commercial space is restricted to 50% of the project or building under the program. Where commercial space exists, the appraiser must state that it is typical for the market, and the commercial percentage has to be documented on the condo questionnaire completed by the HOA.

This is the Old Town problem in one line. Mixed-use buildings with restaurants and retail on the ground floor are exactly the buildings people want to live in, and exactly the buildings agency guidelines restrict.

Pending litigation. The program allows pending litigation when the HOA is named as plaintiff, which is a meaningful distinction. An association suing a builder over construction defects is in a very different posture from an association being sued, and the guidelines treat it accordingly.

Investor concentration and single-entity ownership are the other usual causes: too many units rented rather than owner-occupied, or one owner holding too large a share of the building.

Why this matters more in Scottsdale than most markets

Three local patterns produce non-warrantable projects repeatedly:

1. Mixed-use development through Old Town and along the Scottsdale Road corridor, where ground-floor commercial is the whole appeal.
2. High rental ratios in buildings near the entertainment and resort districts, where a substantial share of units are held as investments or short-term rentals, pushing investor concentration past agency limits.
3. Newer luxury projects still within the developer's control period, or where a developer or single investor retains a large block of units.

None of those are defects in the building. They are characteristics that agency guidelines were not written to accommodate.

The signal that you have hit this

Your lender orders the condo questionnaire and the process goes quiet. Days pass. You get a vague message about "waiting on HOA documents." Then the loan is declined or repriced without a clear explanation.

Ask directly: is this project warrantable, and if not, which characteristic failed? It is a specific question with a specific answer, and it determines whether you need a different program or a different building.

Ask it before the appraisal if you can. An appraisal on a project that cannot be financed is money spent learning something the questionnaire would have told you.

What to have ready

For any Scottsdale condo purchase, particularly in a mixed-use or heavily rented building:

• The condo questionnaire, completed by the HOA, including the commercial space percentage.
• The HOA budget and reserve study.
• Litigation disclosure, including who is the plaintiff and who is the defendant.
• Owner-occupancy and investor concentration figures.
• Single-entity ownership detail.

Associations vary enormously in how quickly they produce these. Start early, because a slow HOA can cost you a contract timeline on its own.

The related programs

Worth knowing that non-warrantable treatment appears across several program families rather than only in a dedicated product. The Graduate Advantage guidelines (revised 09/08/2026) state that non-warrantable condos may be considered, with combined loan-to-value capped at 80% on those projects.

Physician programs take a different line. The MedPro Advantage guidelines (revised 07/16/2025) list condominiums in Florida as outright ineligible, which is a reminder that condo rules are program-specific and geography-specific rather than general.

So the right question is never "can a condo be financed." It is "which program finances this project, at what leverage, and what does that cost against the alternative."

That is a comparison worth running before you are emotionally committed to a unit, and it is the difference between losing the building and buying it.

Why bring this file to us

• We check the project before the offer. Warrantability is knowable early, and finding out after the appraisal is the expensive way.
• We read the questionnaire and the budget ourselves, including the litigation disclosure and the commercial space share.
• We carry programs that accept these projects. A declined project is a lender constraint, not a verdict on the building.
• Broker model. Multiple investors rather than one bank's shelf, which is what a file like this needs when the first answer is no.
• You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999. Direct line: (480) 999-9842.

EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.

Send me the project name before you write, and I will tell you what the questionnaire is likely to say and which program survives it.

Program figures in this post are from the CMG Financial (NMLS #1820) guideline set named above, as published on the revision date given. They describe one investor's program at one point in time. Other investors price and underwrite the same borrower differently, guidelines change without notice, and nothing here is an offer of any specific program or terms. Confirm current eligibility on your own file before you plan around any of it.

Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Rates, terms, and program guidelines change and depend on credit approval, property appraisal, income and asset verification, and other qualifying factors. Not all applicants will qualify. Non-QM, asset-based and business purpose financing carry different pricing, terms and consumer protections than agency financing. Consult your tax advisor regarding the tax treatment of any income or distribution strategy.