On A Condo, The Lender Approves Two Borrowers. You, And The Building.
Here is a call I get more than I used to. Somebody found a condo they love, the price works, their credit is fine, their income is fine. And the loan dies anyway.
Nothing was wrong with them. The building got rejected.
That is the part nobody explains until it is happening to you. On a condo, the lender approves two borrowers. You, and the building.
Why Florida got harder
After Surfside, the state moved. SB 4-D in 2022 and SB 154 in 2023 put real requirements on condo associations.
Milestone structural inspections for condos three stories or higher, once the building hits 25 years old near the coast or 30 years inland. Structural Integrity Reserve Studies, which are third-party analyses of the major structural components, how much life they have left, and what it costs to fix them. And the one that matters most: associations can no longer vote to waive reserve funding for structural components.
For years plenty of buildings kept dues low by voting reserves away. That option is gone, and what replaced it is a number on paper saying exactly how underfunded the building is.
Then the lenders moved too
Fannie Mae and Freddie Mac added structural inspection questions to their condo questionnaires. So the state's paperwork now feeds straight into your loan file.
And the big one: Fannie Mae announced in March 2026 that it was retiring Limited Review, and that change applies to every conventional application dated on or after August 3, 2026.
Limited Review was the light-touch path. Strong borrower, decent down payment, and the building barely got looked at. That door is closed. Almost everything is Full Review now, which means the lender wants the association budget, the financial statements, the reserve study, the delinquency numbers, the meeting minutes, and the insurance.
One more on the horizon. Effective January 4, 2027, the minimum reserve funding requirement moves from 10 percent of the association's annual budget to 15 percent. There is a way around it: a building with a reserve study done or updated in the last three years that is funding at the highest recommended level does not have to hit the 15 percent line. But plenty of buildings that just barely clear the bar today will not clear it after that date.
So what actually kills a condo loan?
In my experience, it is rarely one dramatic thing. It is usually one of these.
Reserves are too thin. The single most common one right now.
A milestone inspection is overdue, or it came back with structural findings and no funded plan to fix them. Findings alone are not fatal. Findings with no money behind them usually are.
Too many units are behind on dues. Delinquency above the threshold and the whole project fails.
Too much of the building is investor-owned, or one entity owns too many units.
Pending litigation, especially anything structural.
The insurance does not meet guidelines, which in Florida is its own adventure lately.
Non-warrantable is not a death sentence
Hear this part, because people get it wrong and walk away from homes they could have bought. If a building does not meet Fannie or Freddie guidelines, it is called non-warrantable. That means conventional conforming financing is out. It does not mean financing is out.
There are portfolio and non-warrantable programs built for exactly this, and they look at the building differently. The terms are not identical to conventional, and I will be straight with you about the tradeoff when we look at your file, but the deal is often still very much alive.
I have a whole page on this at 1rmtg.com/non-warrantable-condo. The first lead this website ever brought me came from somebody searching for non-warrantable condo financing, so I know people are out there hunting for this answer at eleven at night.
What to do before you fall in love
Ask early. Before the inspection period burns, before you are emotionally committed. Ask the listing agent or the association three things: has the milestone inspection been done, is there a completed reserve study, and is there a special assessment either in place or being discussed.
Those three answers tell me most of what I need to know about whether your loan works. Send them over and let me look. It costs you nothing to find out in week one, and a great deal to find out in week four.
Call or text (941) 941-5150.
Tony Fitzgerald, The Mortgage Jedi. NMLS #1284924.
Sources: Florida SB 4-D (2022) and SB 154 (2023) milestone inspection and Structural Integrity Reserve Study requirements; Fannie Mae Lender Letter LL-2026-03 (March 18, 2026), covering the retirement of Limited Review effective for applications dated on or after August 3, 2026, and the reserve funding increase to 15 percent of the annual budget effective January 4, 2027; Fannie Mae and Freddie Mac condo questionnaire structural inspection additions. Requirements and thresholds change, and every association is different, so confirm current guidance for your specific building. This is general education, not legal advice, and not an offer of credit.
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Tony Fitzgerald, NMLS #1284924. 1st Response Mortgage, powered by Mpire Financial Group LLC, NMLS #2108504, Florida Mortgage Lender License #MLD2467. Equal Housing Lender. NMLS Consumer Access: nmlsconsumeraccess.org. This article is general education, not financial, tax, or legal advice, and not an offer of credit or a commitment to lend. Terms vary by borrower, property, and transaction, and program guidelines change over time.
