SB 326 Condo Mortgage California 2026 | Non-Warrantable Condo Loan Options

What Is SB 326 and Why Does It Affect Your Mortgage?

California Senate Bill 326 — the “Balcony Bill” — requires every condominium HOA with three or more units to have a licensed structural engineer or architect inspect all exterior elevated elements (EEEs): balconies, decks, walkways, exterior stairs, and their supporting structures. The law was passed in the wake of a 2015 Berkeley balcony collapse that killed six people, and it mandates inspections every nine years.

The original compliance deadline was January 1, 2025. Assembly Bill 2579 extended the window for some buildings to January 1, 2026. The financing consequences are severe: Fannie Mae and Freddie Mac now refuse to fund loans in condo buildings where SB 326 inspections have revealed unaddressed structural deficiencies. Buildings without a completed inspection, buildings with unfunded repairs, and buildings with outstanding special assessments are all potentially non-warrantable — cut off from conventional financing.

If your condo deal is falling apart over SB 326, call DiVita Home Finance at 800-239-1103. We have financing solutions most lenders don’t.

What Makes a Condo Non-Warrantable Under SB 326?

A condo becomes non-warrantable — ineligible for Fannie Mae/Freddie Mac conventional financing — when any of the following apply:

  • Inspection not completed: The HOA has not yet completed the required SB 326 structural inspection
  • Deficiencies found, repairs unfunded: The inspection identified structural problems but the HOA has not funded or begun repairs
  • Outstanding special assessment: A special assessment has been levied for repairs that has not been fully collected or paid
  • HOA litigation: The building is in litigation related to construction defects or SB 326 findings
  • Insufficient reserves: Starting with the August 3, 2026 rule changes, HOA reserve funds must meet new minimum thresholds

When a building is non-warrantable, every unit in the building is affected — not just units with balconies. A buyer with perfect credit in a non-compliant building will still be denied a conventional loan.

URGENT: The August 3, 2026 Rule Change

Effective August 3, 2026, Fannie Mae is eliminating the Limited Review condo approval process for buildings with 11 or more units. This affects thousands of California condo buyers and sellers right now:

  • Every condo loan in a building with 11+ units will require Full Review — a comprehensive HOA financial and structural analysis
  • HOA reserve funds must demonstrate a minimum 10% threshold toward adequate reserves by January 2027
  • Deferred maintenance findings become automatic flags for conventional financing denial
  • Owner-occupancy ratios will be strictly scrutinized

If you own or are buying a condo in California, your building’s conventional financing eligibility is changing now. Call us at 800-239-1103 to review your building’s status before deals are affected.

Your Mortgage Options When SB 326 Is an Issue

Portfolio Lender Programs

Portfolio lenders hold loans on their own balance sheet rather than selling to Fannie Mae or Freddie Mac. They set their own condo review criteria and can approve financing in buildings conventional lenders reject. Rates run approximately 0.50–1.25% above conventional, but the loan closes and the deal gets done.

Non-QM Condo Loans

Non-Qualified Mortgage programs from specialty investors finance non-warrantable condos without agency guidelines. These programs allow up to 80% LTV, loan amounts from $50,000 to $5,000,000, and DTIs up to 50%. They require full documentation but open deals that would otherwise die.

FHA Spot Approval

Even when a building isn’t FHA-approved as a whole, individual units may qualify for FHA financing through a spot approval process — 3.5% down, credit scores as low as 580. A powerful option for buyers who need low-down-payment financing in an SB 326-affected building.

DSCR Investment Property Loans

For investors purchasing non-warrantable condos as rentals, DSCR (Debt Service Coverage Ratio) loans qualify based on projected rental income with no conventional condo review requirements. No agency approval needed.

Bridge and Hard Money Loans

For buyers who need to close quickly — or for HOAs trying to fund SB 326 repairs to restore warrantable status — short-term bridge and hard money financing provides speed and flexibility when conventional timelines don’t work.

California Markets Most Affected by SB 326

Palm Springs

One of California’s most condo-dense cities. Hundreds of condo developments — many on Agua Caliente Indian leased land — now face the double challenge of SB 326 non-compliance and leased land financing requirements simultaneously. We are Palm Springs leased land specialists and SB 326 condo lenders. See our leased land mortgage guide →

San Francisco

San Francisco’s high-density, older building stock includes thousands of condos with balconies, elevated walkways, and decks. Older construction means more structural findings — and more financing disruptions in one of California’s most expensive condo markets.

Los Angeles

West Hollywood, Downtown LA, Silver Lake, Koreatown, Santa Monica, and Culver City all have dense condo inventory across a wide age range of buildings. SB 326 is actively disrupting deals throughout LA County.

Orange County

Newport Beach, Irvine, Huntington Beach, and Laguna Beach have substantial condo markets. Coastal and oceanfront buildings face elevated risk from salt air corrosion accelerating structural deterioration in balconies and elevated walkways.

Marin County

Sausalito, Mill Valley, and Tiburon have significant condo and townhome inventory — particularly waterfront buildings where moisture and marine air drive early structural issues. High prices make SB 326 complications especially expensive here.

East Bay

Oakland and Berkeley have extensive condo, loft, and converted building inventory. Older building stock and dense urban environments mean a significant share of East Bay condos face SB 326 scrutiny — and many are non-compliant.

Frequently Asked Questions

Does SB 326 affect all California condos?

SB 326 applies to residential condos with three or more units that have exterior elevated elements. Single-family homes and two-unit properties are not affected. Most multi-unit condo buildings in California are subject to the law.

What if the HOA has started repairs but hasn’t finished?

Fannie Mae requires critical repairs to be completed or have a fully funded plan in place. A documented scope, timeline, and funded budget may allow some buildings to qualify even mid-repair. We evaluate each building individually — call us to discuss yours.

Can I still buy a condo in a non-compliant building?

Yes — with the right lender and program. Cash buyers have no restriction. Portfolio, non-QM, and FHA spot approval programs all remain available. The key is working with a lender who has these solutions. We do.

Does SB 326 affect refinances?

Yes. If your building has SB 326 non-compliance issues, conventional refinances may be denied. Portfolio and non-QM refinance options remain available. Call us before starting a refinance to review your building’s status.

How do I find out if my building is compliant?

Contact your HOA and request the SB 326 inspection report. If one doesn’t exist, your building has not yet complied. We can help you evaluate what the findings mean for financing.

Will SB 326 problems go away once repairs are done?

Yes. Once a building completes its inspection, funds or finishes required repairs, and resolves the special assessment, it can regain warrantable status and conventional financing eligibility is restored.

Don’t Let SB 326 Kill Your Deal

DiVita Home Finance works with portfolio lenders, non-QM investors, FHA spot approval specialists, and bridge lenders who handle SB 326-affected properties throughout California. We serve buyers, sellers, and homeowners in Palm Springs, San Francisco, Los Angeles, Orange County, Marin County, East Bay, and all of California.

Call 800-239-1103 today or apply online. We’ll review your specific building and tell you exactly what financing options are available — usually within the same business day.

More SB 326 Mortgage Resources

About DiVita Home Finance

DiVita Home Finance is a small, family-owned mortgage company based in Marin County, California. When you call, you speak directly with Michael DiVita — the owner — not a call center, not an out-of-state rep, not someone reading from a script. We’re here for a low-key, no-obligation conversation about your situation.

We take your privacy seriously. We will never sell your information to third-party lenders or lead generation companies — unlike many of the large mortgage platforms. Your inquiry stays with us, period.

📞 Call: (800) 239-1103  |  💬 Text Michael directly: (310) 849-9124