Florida Condo Turned Down by the Bank? Here's Why, and What Can Still Work

The unit is on the sixth floor in Sarasota, with sliders that open toward the bay and fresh white paint on the balcony rails. Your offer was accepted and the inspection went fine. Then the lender called to say it can't finance the building.

That's usually when clients call me. Your credit and income may never have been the problem. The lender looked at the condo project as a whole, and the project missed a rule.

Why do banks turn down some Florida condos?

Fannie Mae and Freddie Mac back most home loans, so many lenders follow their condo project rules closely. Fannie Mae's Selling Guide spells out traits that make a whole project ineligible, and Freddie Mac keeps a similar list. A building that misses them is often called non-warrantable. Here are the reasons the guidelines name most often.

The HOA is in a lawsuit. Fannie Mae won't buy loans in a project where the HOA is a party to pending litigation, or where the developer is in litigation about safety, structural soundness, habitability, or functional use. Minor matters, like a neighbor dispute or a claim the insurance carrier is defending, can still pass.

The reserves look thin. Lenders review the HOA budget to confirm it sets aside enough for future repairs, or they rely on a qualifying reserve study instead. A budget that underfunds reserves can stop the loan.

Too many units are rented out. FHA requires a minimum share of owner occupied units before it will insure loans in a condo project. Freddie Mac still applies owner occupancy rules to new condo projects, and in Florida, buildings with a high share of rentals are a common reason a project lands outside agency rules.

One owner holds a lot of units. Both agencies limit how many units a single person, investor group, or company can own in one project. Above that limit, the project is ineligible, unless the purchase itself lowers that owner's share and meets the agencies' other conditions.

There is a lot of commercial space. Shops, offices, a hotel, or rental apartments inside the building all count as commercial space. Past the agency limit, the project is out.

The building needs critical repairs. Fannie Mae treats material deficiencies, water intrusion, advanced deterioration, and a failed mandatory structural inspection as critical repairs. A special assessment tied to an unfinished critical repair also makes the project ineligible until the work is done.

Insurance matters too. Reporting on Fannie Mae's list of ineligible Florida buildings found inadequate insurance was the most common reason, with deferred maintenance close behind.

How do Florida's milestone inspection and SIRS rules fit in?

After the Champlain Towers South collapse in Surfside, Florida passed SB 4-D in 2022. It created milestone inspections and new structural reserve rules for condo buildings. HB 913, signed in 2025, adjusted both.

A milestone inspection is a structural inspection by a licensed architect or engineer. Under section 553.899 of the Florida Statutes, a condo building three habitable stories or taller needs one by December 31 of the year it turns 30, and every 10 years after. A local agency can move that to 25 years for buildings near salt water.

A structural integrity reserve study, or SIRS, covers items like the roof, structure, fireproofing, plumbing, electrical systems, waterproofing, and windows. Under section 718.112, buildings three habitable stories or higher need one at least every 10 years. HB 913 moved the first deadline for older associations to December 31, 2025. Since the end of 2024, associations that need a SIRS can't vote to waive those structural reserves.

HB 913 also lets an association fund those reserves with special assessments, lines of credit, or loans. Under section 718.112(2)(f), for budgets adopted through 2028, an association that finished a milestone inspection in the previous two calendar years can pause or reduce reserve contributions to pay for the repairs it called for. That takes a majority of the total voting interests and lasts no more than two consecutive annual budgets.

This is where state law and loan rules meet. If a milestone report or a SIRS shows critical repairs that haven't been made, Fannie Mae and Freddie Mac treat the project as ineligible until the work is finished and documented. My page on Florida condo special assessments covers what an assessment can mean for your budget.

Does this affect a refinance too?

Often, yes. The project rules apply to the loan, whether it's a purchase or a refinance. Freddie Mac checks for critical repairs even on refinances that otherwise skip a full project review, in buildings with 11 or more attached units.

What other loan options can work for a non-warrantable condo?

Fannie Mae and Freddie Mac rules decide which loans they will buy. They don't decide every loan a lender can make. Some lenders keep loans on their own books, called portfolio loans, and others make non-QM loans that sell outside the agency market.

Federal regulators have said lenders can meet the ability to repay rule with responsibly underwritten loans that are not Qualified Mortgages. News reporting on Florida condos since Surfside describes these non-conforming loans as available, with tradeoffs.

The tradeoffs are real. These loans often ask for a larger down payment and more paperwork, and they can cost more than a conventional loan. If the unit will be a rental, a DSCR loan that qualifies on the rent may also fit. My non-warrantable condo page walks through how I compare them.

As a mortgage broker, I don't lend the money. I compare programs from several lenders and look for one whose condo rules fit the building. Residential home loans in Maine and Florida. DSCR loans in 37 states.

What should you gather before we talk?

The answer is usually in the building's paperwork, the documents lenders ask to see:

• The lender's decline note or condo questionnaire result
• The HOA's current budget and financial statements
• The most recent SIRS or reserve study
• The milestone inspection report, if the building has one
• Recent board meeting minutes
• Any special assessment notices

FAQ

Why was my Florida condo loan denied?

A Florida condo loan is often denied because the building fails Fannie Mae or Freddie Mac project rules, even when the buyer qualifies. Fannie Mae's Selling Guide lists pending HOA litigation, critical repairs, and excess commercial space among the traits that make a project ineligible.

What is a non-warrantable condo in Florida?

A non-warrantable condo in Florida sits in a building that falls outside the condo project rules set by Fannie Mae and Freddie Mac, so a conventional loan there can't be sold to either one. Freddie Mac's list of ineligible projects includes buildings in litigation and buildings with excessive single investor concentration.

Can you get a mortgage on a non-warrantable condo in Florida?

A mortgage on a non-warrantable Florida condo can still be possible through portfolio or non-QM programs that set their own project rules. Federal regulators have said lenders can satisfy the ability to repay rule with responsibly underwritten loans that are not Qualified Mortgages.

What is a SIRS for a Florida condo?

A SIRS is the structural integrity reserve study Florida requires for condo buildings three habitable stories or higher, and lenders reviewing a Florida condo loan may ask for it. Under section 718.112 of the Florida Statutes, the study must be done at least every 10 years and covers items like the roof, structure, plumbing, and electrical systems.

Does a milestone inspection affect a condo mortgage in Florida?

A Florida milestone inspection can affect a condo mortgage, because Fannie Mae treats a failed mandatory structural inspection or unfinished critical repairs as reasons a project is ineligible. Florida requires the inspection for condo buildings three habitable stories or more by the end of the year they turn 30, then every 10 years.

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Did a lender pass on a Florida condo you had your heart set on? Forward me the decline note and the HOA papers through my contact page or at travis@travis.mortgage. I'll look for a program whose condo rules fit, so the sixth floor unit by the bay can stay in the running.

Started in 2004 and I'm still here.