Why a Lender Will Not Finance That Condo

A buyer walking a condominium building asks about the monthly fee, the roof, the assessment history. Almost nobody asks the question that actually decides whether the purchase happens at all.

Will a lender lend on this building?

Not on the unit. On the building. Conventional financing runs a project-level review before it ever looks at the borrower, and a building that fails it takes every conventionally financed buyer off the table at once. In a market where 54.2% of Miami condominium sales closed in cash in January 2026, per MIAMI REALTORS, that is not a theoretical risk. It is most of the transaction volume.

The hard part in 2026 is that Florida law and the secondary mortgage market are now pulling in opposite directions, and a building can satisfy one while failing the other.

Market briefWhat "warrantable" actually means

A warrantable condominium is one a lender can finance and then sell to Fannie Mae or Freddie Mac. Non-warrantable means the loan has to stay on a portfolio lender's books, which shrinks the buyer pool to whoever that lender will approve, plus cash.

The review is of the association, not the unit. Your credit score, down payment, and income are irrelevant to it. A borrower with 40% down and an 800 score cannot buy a unit in a project Fannie Mae has marked ineligible, using a conventional loan, at any price.

Worth being precise about what these rules are. Fannie Mae and Freddie Mac requirements are investor guidelines, not Florida law, and an individual lender can impose stricter overlays on top of them. Florida's milestone inspection and reserve study requirements are statute. The two operate independently, which is exactly why a building can be in compliance with one and disqualified by the other.

The threshold tests Fannie Mae applies are set out in Selling Guide section B4-2.1-03, Ineligible Projects, effective August 5, 2026:

Source: Fannie Mae Selling Guide B4-2.1-03, effective August 5, 2026. Freddie Mac applies the same 15% delinquency test, per its condominium project review fact sheet dated August 2026.

Two of those rows do most of the damage in South Florida. The $10,000-per-unit repair line and the failed-inspection line both point straight at Florida's own building safety regime.

Market briefWhat Fannie Mae changed in 2026, and what it did not

Lender Letter LL-2026-03, issued March 18, 2026 and folded into the Selling Guide in August, rewrote several rules that had been penalizing Florida specifically.

Limited Review was retired for applications dated on or after August 3, 2026. Projects now go through Full Review or qualify for a waiver. The Florida-specific limited review restriction went with it.

The requirement that new attached projects in Florida go through the Project Eligibility Review Service was retired. Florida projects are no longer singled out for that extra step.

The 50% investment property concentration limit was retired for established projects under Full Review. Fannie Mae's August 2026 FAQs clarify the scope: owner-occupancy was retired only for established projects on investor transactions. New and newly converted projects keep their presale and owner-occupancy requirements.

Waiver of project review expanded to projects of ten or fewer units.

None of that helps a building with a structural problem. The critical repairs standard, the failed-inspection standard, and the reserve requirement all survived intact, and one of them is about to get stricter.

Market briefThe reserve rule, and the date that changes it

Under Full Review as the Selling Guide reads today, the association budget must fund replacement reserves at at least 10% of the budget.

For applications dated on or after January 4, 2027, Lender Letter LL-2026-03 raises that to 15% of the annual budgeted income assessment.

Two details matter more than the headline number. Special assessments cannot substitute for the budgeted reserve allocation. And an association can use an acceptable reserve study instead of the percentage test, but only if funded reserves meet or exceed what the study recommends, the study was completed within three years of project approval, and the study does not rely on the baseline funding method, which Fannie Mae expressly bars as a route around the requirement.

If you are buying into a building that currently clears 10% and not much more, ask what the 2027 budget looks like. A building that is compliant in December can stop being financeable in January without anything physical changing.

Market briefWhere Florida law and the lender now disagree

This is the part that catches people, and it is genuinely new.

HB 913, enacted as chapter 2025-175 and effective July 1, 2025, added a relief valve to section 718.112(2)(f), Florida Statutes. For budgets through December 31, 2028, a unit-owner-controlled association that has completed a milestone inspection within the prior two years may vote to temporarily pause reserve contributions for no more than two consecutive annual budgets, or to reduce the amount funded. The same law added the option to fund capital expenses with a line of credit or loan instead.

That was a deliberate legislative response to owners being squeezed by post-Surfside reserve requirements. It is lawful. It is also, from a lender's side of the table, an association that has stopped funding reserves.

So an association can vote a pause that Chapter 718 permits and, in the same motion, walk the building toward a Fannie Mae eligibility problem. Nothing in the statute requires the board to tell owners that. Nothing requires the board to run the math on what it does to unit values.

If you are buying, the board minutes that record a reserve pause vote matter more than the current budget. If you own, that vote is the one to attend.

Market briefThe list you cannot read

Fannie Mae maintains project statuses in Condo Project Manager, and a project can be flagged Unavailable. Lenders must confirm a project is not in that status, and the check applies even where project review is otherwise waived.

Fannie Mae's own guidance states it may set a project to Unavailable when it becomes aware the project does not comply with Selling Guide requirements. Removal is lender-initiated: a lender who has documentation that the issues are resolved submits it for review. Condo Project Manager is a lender-facing system. Fannie Mae has published nothing indicating the status is disclosed to associations, owners, or agents, which is why most buildings find out when a buyer's loan dies.

Freddie Mac handles this differently, and it is worth knowing. Since February 2024, Condo Project Advisor discloses project statuses, including a Not Eligible status, to Seller/Servicers, third-party originators, and authorized HOA representatives, with a Not Eligible Status Data Form that allows an appeal.

That means an association board is not entirely blind. Someone authorized by the association can find out where the building stands with Freddie Mac and contest it. I have yet to meet a South Florida board that knew the channel existed.

Market briefFlorida's own deadlines, stated precisely

Loose summaries of these dates circulate constantly. The statute controls.

Milestone inspections, section 553.899(3)(a), apply to condominium and cooperative buildings three habitable stories or more in height, due by December 31 of the year the building turns 30 and every 10 years after. Buildings that reached 30 years before July 1, 2022 were due by December 31, 2024. Buildings reaching 30 between July 1, 2022 and December 31, 2024 were due by December 31, 2025. Both dates have passed. A local enforcement agency may require inspection at 25 years based on local conditions such as proximity to salt water.

Structural integrity reserve studies, section 718.112(2)(g), are required every 10 years for each building three habitable stories or higher. Associations existing on or before July 1, 2022 had to complete one by December 31, 2025, extended to December 31, 2026 where the association is completing a milestone inspection and the study simultaneously.

The connection to financing is direct. A project that failed a jurisdictional inspection specific to structural safety is ineligible under Fannie Mae B4-2.1-03. Not delayed. Ineligible.

Market briefWhat it does to price, and what I will not claim

Here the honest answer is narrower than what you will read elsewhere.

What is documented: 21 of 2,397 South Florida condominium buildings were FHA-approved as of the January 2026 reporting period, and MIAMI REALTORS stated plainly that the lack of FHA loans for many existing Miami buildings is preventing further market strengthening. Miami-Dade condominium inventory sat at 13.7 months of supply in January 2026, which MIAMI REALTORS characterized as a buyer's market. Broward closed condominium sales fell 2.8% year over year in January 2026 with a median of $250,000, per WLRN reporting on the January data.

What I will not give you is a number for how much a non-warrantable designation discounts a unit, or a rate premium for portfolio financing. I could not source either to a lender rate sheet or a dataset, and the figures circulating are marketing copy. A written quote from a lender is worth more than any range I could publish.

The mechanism is not in dispute even where the magnitude is. Remove conventional financing and the buyer pool is cash plus portfolio lending. Pools that small price differently. The wider split between the condominium market and everything else is covered in the ten-year look at Miami-Dade and Broward.

Market briefThe order to ask in

Request these before the inspection period runs, not after.

1. The milestone inspection report, phase one and phase two if there was one, and the date it was accepted by the local building official 2. The structural integrity reserve study, and whether the reserves it recommends are actually being funded 3. Board minutes for the last 24 months, read for the words assessment, reserve, litigation, engineer, concrete, and insurance 4. The current budget, with the reserve line as a percentage of assessment income 5. Any vote to pause or reduce reserve funding under the 2025 law 6. Current and pending special assessments, with approval dates and remaining balances 7. The association's insurance renewal and deductible structure 8. Your lender's project review status, in writing, before you release your inspection contingency

Point 8 is the one buyers skip. A lender saying the borrower is approved is not the same as the lender saying the project is approved. If you want that sequencing handled for you, that is what buyer representation is for.

Market briefIf you already own in a building like this

Two things are worth doing whether or not you plan to sell.

Find out where the building stands with Freddie Mac through an authorized association representative, since that channel actually exists. And read the reserve line in next year's proposed budget before the vote rather than after, because a pause that looks like relief on a monthly statement can show up later as a financing problem for every owner trying to exit.

If you want a specific building looked at before you write an offer or list a unit, get in touch and we can work through the documents together.

If you are weighing a sale in a building with an open assessment, the sequencing of disclosure and pricing is its own subject, covered in the piece on selling a condo that carries a special assessment.

This is general information about how project eligibility works, not a statement about any specific building. Eligibility is determined by the lender and the agencies, not by me, and the status of any particular association has to be confirmed in writing by your lender and against the association's own current documents.