In most of the country, a mortgage denial is about the borrower — credit, income, assets, debt ratios. In Florida condo financing, it is frequently about the building.
A buyer with excellent credit and a large down payment can still be declined because the condominium association has not completed a required inspection, has not funded its reserves, or has repairs outstanding that a lender considers critical. Understanding which rules apply to the association, and which apply to you, is the difference between a smooth closing and a surprise two weeks before your closing date.
Florida Statute 553.899 requires what the law calls a milestone inspection: "a structural inspection of a building, including an inspection of load-bearing elements and the primary structural members and primary structural systems," performed by an architect licensed under chapter 481 or an engineer licensed under chapter 471.
Which buildings. A building three habitable stories or more in height, as determined by the Florida Building Code, that is subject in whole or in part to the condominium form of ownership under chapter 718 or the cooperative form under chapter 719. The statute expressly does not apply to single-family, two-family, three-family, or four-family dwellings with three or fewer habitable stories above ground.
When. By December 31 of the year the building reaches 30 years of age, based on the date the certificate of occupancy was issued, and every 10 years thereafter. A local enforcement agency may require inspection at 25 years instead, where local circumstances such as proximity to salt water justify it.
How it works. Phase one is a visual examination and qualitative assessment by the licensed architect or engineer. If no signs of substantial structural deterioration are found, phase two is not required. If substantial structural deterioration is identified in phase one, a phase two inspection must be performed. Phase one must be completed within 180 days after the building owner receives written notice from the local enforcement agency.
The statute defines "substantial structural deterioration" as substantial structural distress or weakness that negatively affects the building's general structural condition and integrity — and specifically excludes surface imperfections such as cracks, sagging, deflections, misalignment, signs of leakage, or peeling finishes, unless the licensed professional determines those are a sign of substantial structural deterioration.
Florida Statute 718.112(2)(g) requires a residential condominium association to have a structural integrity reserve study completed at least every 10 years after the condominium's creation, for each building on the property that is three habitable stories or higher.
At a minimum, the study must cover:
The study is based on a visual inspection and must be performed or verified by an engineer licensed under chapter 471, an architect licensed under chapter 481, or a person certified as a reserve specialist or professional reserve analyst by the Community Associations Institute or the Association of Professional Reserve Analysts.
Florida's Division of Florida Condominiums, Timeshares, and Mobile Homes adjusts the $25,000 threshold annually for inflation based on the Consumer Price Index for All Urban Consumers released in January, and posts the adjusted figure on its website.
This is the provision that has changed the most for buyers.
Historically, members of a condominium association could vote to fund no reserves or reduced reserves. Under Florida Statute 718.112(2)(f), for a budget adopted on or after December 31, 2024, the members of a unit-owner-controlled association that must obtain a structural integrity reserve study may not vote to provide no reserves or less reserves than required for the items identified in the SIRS. A narrow exception exists for associations operating a multicondominium where an alternative funding method has been approved by the division.
The statute allows those reserves to be funded by regular assessments, special assessments, lines of credit, or loans — with a special assessment, line of credit, or loan requiring approval by a majority of the total voting interests.
For a buyer, this matters in a direct way: associations that had been deferring have fewer options for continuing to defer, which is why assessment increases and special assessments have become a routine part of Florida condo due diligence.
State law governs the association. Investor guidelines govern your loan — and they are stricter in some respects.
Under Fannie Mae's project eligibility standards, a condo project is ineligible when it has critical repairs outstanding. The guide defines critical repairs to include:
A project subject to an evacuation order is ineligible "until the unsafe condition has been remediated and the building(s) is deemed safe for occupancy." Projects with pending litigation related to safety, structural soundness, habitability, or functional use are ineligible unless the matter meets specific minor-litigation criteria.
On the financial side, the lender must verify that the association's budget "provides for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget." A qualifying reserve study completed within three years can substitute for that 10% calculation in defined circumstances. The lender must also confirm that no more than 15% of the total units in the project are 60 days or more past due on a special assessment.
Put plainly: a Florida building can be fully compliant with state law and still fail investor guidelines, and vice versa. Both have to clear.
Because the project review happens after you are under contract, the timeline is unforgiving. Ask for these before you commit, not after:
A unit can be perfectly financeable while the identical unit two floors up in a different building is not. The project is the variable.
A condo that fails conventional project review is often called non-warrantable. That does not always end the purchase — it changes which financing applies. Portfolio and non-QM programs evaluate projects under different standards, usually with different pricing and down payment expectations. Whether that tradeoff makes sense depends on the specific unit and your plans for it.
For financing basics before you shop, see mortgage basics and our conventional and FHA program pages. FHA maintains its own condo project approval process, which is separate from the conventional standards described above.
Buying elsewhere in Florida? See our Florida loan limits guide and Florida down payment assistance guide, plus local pages for Miami, Melbourne, and St. Augustine.
To have someone licensed in Florida review a specific building with you, browse our loan officer directory or get started.
Condo financing reviews the project as well as the borrower. If the association has not completed a required milestone inspection or structural integrity reserve study, has critical repairs outstanding, or does not meet the lender's reserve and delinquency thresholds, the loan can be declined regardless of your credit.
Buildings three habitable stories or more that are subject to the condominium or cooperative form of ownership. The inspection is due by December 31 of the year the building turns 30, based on the certificate of occupancy date, and every 10 years after. A local enforcement agency may require it at 25 years where local conditions justify it.
A study required at least every 10 years for residential condo buildings three habitable stories or higher. It covers the roof, structure, fireproofing and fire protection, plumbing, electrical, waterproofing and exterior painting, windows and exterior doors, and other qualifying items, based on a visual inspection by a licensed engineer, licensed architect, or certified reserve analyst.
For budgets adopted on or after December 31, 2024, a unit-owner-controlled association that must obtain a structural integrity reserve study generally may not vote to provide no reserves or reduced reserves for the studied items. A limited exception exists for certain multicondominium associations with a division-approved alternative funding method.
A project that does not meet conventional project eligibility standards. Financing may still be available through portfolio or non-QM programs, which review projects under different criteria and typically carry different pricing and down payment terms.
This article is for general information only and is not legal, tax, or financial advice. State law and investor guidelines change; confirm current requirements with a licensed professional before making decisions. Xpert Home Lending, Inc. is an Equal Housing Lender.