Condos · Florida · First-time buyers & investors

Buying a condo in Florida after Surfside: what lenders check

Why the building matters as much as you do

A condo loan is backed by your unit, but your unit's value depends on the whole building: its structure, its reserves, its insurance and how the association is run. That's why lenders review the condo project, not just your credit and income. If the project doesn't qualify, a great buyer can still get turned down.

What Florida now requires

• Milestone inspections. Condo and co-op buildings three or more habitable stories tall need a structural inspection when the building reaches 30 years old (or 25 if the local building official requires it), then every 10 years.¹ Phase 1 is a visual review; Phase 2 happens only if Phase 1 finds substantial structural deterioration.¹
• Structural integrity reserve studies (SIRS). Associations with buildings three or more habitable stories must complete a SIRS at least every 10 years and fund reserves for key items like the roof, structure, windows and exterior doors.^1,2

These rules are good for owners long term, but they can mean big repair bills and special assessments in older buildings. That's exactly what lenders look at.

What makes a building ineligible for a Fannie Mae loan

Fannie Mae's Selling Guide lists project characteristics that make a condo ineligible.³ The ones that come up most in Florida:

• Critical repairs that affect safety, structural soundness or habitability, including any mold, water intrusion or damaging leaks, and unfunded repairs over $10,000 per unit that should be done within 12 months.
• Recent inspections that show problems. If a structural or mechanical inspection was done within the last 3 years, the lender must review it, and it can't show unaddressed critical repairs.
• Special assessments tied to an unfixed critical repair.
• Certain litigation involving the association about safety, structural soundness or habitability.
• Too much commercial space (over 35% of the total) or a single owner holding too many units.

Freddie Mac and FHA have their own project rules, and some lenders offer non-warrantable condo loans for buildings that don't meet agency guidelines. Terms on those differ, so compare carefully.

What to ask for before you make an offer

1. The most recent milestone inspection report (Phase 1, and Phase 2 if there was one).
2. The latest SIRS and the current reserve balance.
3. Any special assessments, current or approved, and what they pay for.
4. The association's master insurance policy and what it covers.
5. Whether the association is in any litigation.
6. The budget, and how many units are rentals or owned by one person.

Then send the building name to your lender early. I review the project before you're locked into the contract, so you don't find out at underwriting.

Frequently asked questions