Condo Financing in Florida

Why condos are different

When you finance a single-family home, the lender mostly cares about you and the property. With a condo, the lender also cares about the entire project — the building, the HOA, the financials, the percentage of investor-owned units, the structural reserves, any litigation. If the project itself doesn't pass review, the loan dies — even if you and the unit are perfect.

This matters in Florida specifically because the condo stock skews older, hurricane-exposed, and (post-Surfside) under heightened structural scrutiny. A unit you love can be in a building that no major lender will finance.

Warrantable vs. non-warrantable

"Warrantable" means the project meets Fannie Mae and Freddie Mac project standards. Conventional loans require it. The standards are detailed but the headlines:

• Investor concentration. No more than 50% of units rented (some lenders allow 60-70%). Critical in Florida where many buildings are heavily investor-owned.
• Reserves. HOA must have at least 10% of annual budget allocated to reserves, with a recent reserve study showing adequacy for major systems.
• No active special assessments over a certain threshold without funding plans.
• No litigation threatening the financial stability of the HOA.
• No single entity owning more than 20% of units (some exceptions).
• Insurance adequate. Master policy must cover all major perils with appropriate limits.
• Project must be complete — no significant deferred maintenance.
• Owner-occupancy minimum for some loan types (10-50% depending on loan).

Non-warrantable means one or more of these criteria failed. The project isn't broken — it just doesn't fit Fannie/Freddie's box. Plenty of nice condos are non-warrantable.

What changed after Surfside

The 2021 collapse of Champlain Towers South in Surfside changed condo lending nationwide, but especially in Florida. Fannie and Freddie added "critical repair" criteria — basically, any condo with significant deferred maintenance or unfunded structural concerns becomes ineligible for conventional financing.

Florida itself passed laws (SB 4-D) requiring older buildings to undergo structural inspections and fund reserves at specific levels. This created a cascade of buildings discovering they need millions in repairs and special assessments — which then makes those buildings non-warrantable until the work is funded.

How to check warrantability before you offer

The HOA fills out a "condo questionnaire" the lender uses to review the project. Different loan types use different questionnaires (Fannie's 1076, Freddie's 477, FHA's specific form, etc.). The HOA charges $200-500 to fill it out.

Practical workflow before you offer:

1. Ask the listing agent for recent HOA financials, current reserves, and minutes from the last 6-12 months. If they hesitate, that's a flag.
2. Check for special assessments — any active or recently-completed major assessments tell you the building's status.
3. Ask about owner-occupancy ratio. Heavy investor concentration is the most common warrantability fail.
4. Check FHA/VA approval if you're using either of those programs. They have separate approved-condo lists.
5. If FHA condo project approval is missing, a single-unit FHA approval is sometimes possible — but takes additional underwriter time.

Financing non-warrantable condos

Non-warrantable doesn't mean unfinanceable — it means specific lenders. Programs that finance non-warrantable Florida condos:

• Portfolio lenders (banks holding the loan) — most flexibility on project criteria. Often the best option for non-warrantable.
• Non-QM lenders — programs designed specifically for non-warrantable condos, with rate premiums of 0.5-1.5% over conventional.
• Jumbo lenders — many jumbo programs are more flexible than conventional on warrantability.
• DSCR lenders for investment purchases — often easier on non-warrantable than conventional investment loans.

Common scenarios where non-warrantable lenders are needed: luxury Florida condos with heavy investor concentration, older coastal buildings mid-special-assessment, smaller buildings with limited reserves, hotel-condo properties.

Florida condo lending specifics

• Older Miami / Miami Beach buildings — heavy investor concentration, age, sometimes hotel-condo structure. Frequently non-warrantable.
• Naples / Marco Island luxury condos — often heavily seasonal, sometimes investor-owned. Mixed warrantability.
• Sarasota / Longboat Key towers — many older buildings undergoing milestone inspections; warrantability shifts as work progresses.
• Newer Tampa / St. Pete urban condos — generally warrantable, especially newer buildings under 10 years.
• Hotel-condos / condo-hotels — almost always non-warrantable. Specific lenders for these.
• Single-entity ownership — common in some Florida resort developments where the developer still owns 30%+ of units. Usually fails warrantability.

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