Florida Condo Financing: What Changed and What It Means for Buyers

If you're looking at buying a condo in Florida, you need to understand that the financing landscape has fundamentally changed. Not a little. Fundamentally.

The collapse of Champlain Towers South in Surfside in June 2021 killed 98 people and exposed a truth that the Florida condo industry had been ignoring for decades: associations were routinely waiving reserve contributions to keep HOA fees low, deferring structural maintenance, and hoping nothing catastrophic would happen.

Florida's legislature responded with sweeping reforms. Senate Bill 4-D (2022), SB 154 (2023), and House Bill 913 (2025) created a new framework of mandatory structural inspections, required reserve funding, and transparency rules. Then Fannie Mae and Freddie Mac added their own changes on top. The combined effect has reshaped what it means to buy, finance, and own a Florida condo.

I'm licensed in Florida and I work with condo buyers here. This post explains what changed, what it means for your ability to finance a purchase, and how to protect yourself before you write an offer.

What Changed: The Legislation

The reforms center on two requirements that didn't exist before: milestone inspections and Structural Integrity Reserve Studies (SIRS).

Milestone inspections are mandatory structural assessments by a licensed engineer. Any condo building three stories or taller must complete a Phase 1 inspection at 30 years of age (25 years if within three miles of the coast), and every 10 years after. If the engineer finds structural distress in Phase 1, a more detailed Phase 2 inspection follows. Buildings that received their certificate of occupancy before July 1, 1992 were required to complete their initial inspection by December 31, 2024. Buildings reaching the threshold later have staggered deadlines.

The Structural Integrity Reserve Study (SIRS) is the financial companion to the milestone inspection. It identifies eight structural components (roof, load-bearing walls, fire protection, plumbing, electrical, waterproofing, windows/doors, and any other item exceeding $25,000 that affects those systems) and calculates how much the association needs to set aside for their eventual repair or replacement.

The critical change: associations can no longer vote to waive or reduce reserve contributions for SIRS-covered components. Before SB 4-D, boards routinely kept monthly fees low by underfunding reserves. That practice ended on December 31, 2024. As of January 1, 2026, associations must be actively funding reserves at the levels their SIRS recommends.

This is where the financial pain is concentrated. Buildings that deferred maintenance for years are now facing reality. Special assessments of $30,000 to $75,000 per unit are common in older buildings, particularly in South Florida. In some buildings with severe deferred maintenance, assessments have exceeded $100,000 per unit.

What Changed: Fannie Mae and Freddie Mac

The legislative reforms triggered parallel changes from the government-sponsored enterprises that back most conventional mortgages.

On March 18, 2026, Fannie Mae issued Lender Letter LL-2026-03 with two major changes. First, the Limited Review process for established condo projects is being retired, effective for applications dated on or after August 3, 2026. Limited Review previously allowed buyers with larger down payments (usually 25%+) to skip the detailed project review. That shortcut is going away. Every condo purchase going through Fannie Mae will require a Full Review, which means the lender needs the HOA budget, financial statements, reserve study, delinquency data, meeting minutes, and insurance documents.

Second, the minimum reserve funding threshold is increasing from 10% to 15% of annual budgeted assessment income, effective January 4, 2027. Buildings that are currently at 10-14% funded reserves may find themselves classified as non-warrantable under the new standard, which would block conventional financing entirely.

Freddie Mac issued matching guidance the same day.

The practical impact: more buildings will fail warrantability review. More buyers will need to explore non-QM financing (portfolio loans, DSCR loans for investors) or bring larger down payments. And the due diligence required before writing an offer has increased significantly.

What Changed: Insurance

The third force reshaping Florida condo financing is insurance. Master-policy premiums have been climbing for years, driven by hurricane risk, litigation reform, and carrier exits from the Florida market. After the SB 4-D reforms, buildings with structural issues identified in inspections face even higher premiums or loss of coverage entirely. Some associations have been forced onto surplus lines carriers at two to three times their previous cost.

These costs get passed through to unit owners as higher monthly HOA fees. A building where the master policy doubled from $200,000 to $400,000 per year spreads that additional $200,000 across all unit owners. In a 100-unit building, that's $2,000 more per unit per year, or about $167 more per month in HOA dues.

On top of the master policy, buyers need their own HO-6 unit-owner policy, and lenders may require flood insurance if the building is in a FEMA flood zone, even for upper-floor units.

The cumulative effect: monthly carrying costs for Florida condos are significantly higher than they were three years ago. HOA fees that were $300/month in 2022 may be $500-$800+ today after absorbing reserve increases and insurance hikes. That directly affects your qualifying DTI and how much condo you can afford.

How This Affects Your Ability to Get a Mortgage

All of these changes flow downhill to the individual buyer trying to finance a condo purchase. Here's what it looks like in practice.

Warrantability is harder to achieve. A building needs to pass a project review that checks reserve funding levels, delinquency rates, owner-occupancy ratios, insurance coverage, pending litigation, and now structural inspection compliance. More buildings are failing these reviews than ever before. If the building you want to buy in is non-warrantable, you can't get conventional (Fannie Mae/Freddie Mac) financing.

Non-warrantable doesn't mean unfinanceable. It means the loan path changes. Non-QM portfolio loans, DSCR loans for investors, and some credit union programs can finance non-warrantable condos. The trade-offs are higher down payments (typically 20-30%), higher interest rates (often 1-3% above conventional), and fewer lender options. As a broker with access to 150+ wholesale lenders, I can find options for non-warrantable condos that a single bank cannot.

Higher HOA fees reduce your buying power. When a lender calculates your DTI, they include the full HOA payment. A building where the HOA jumped from $300 to $700/month just cut your effective purchasing power by roughly $60,000-$80,000. Make sure you're using the current HOA amount (not the amount listed on an old MLS listing) when you run your numbers.

Special assessments can kill a deal. If the building has a pending or recently approved special assessment, lenders will factor that into the underwriting. A $50,000 special assessment that's being collected as a lump sum is money the buyer needs at closing (or the seller needs to pay off before closing). If it's being collected in monthly installments, those payments get added to your DTI.

What to Check Before You Write an Offer

The due diligence checklist for a Florida condo in 2026 is longer than it used to be. Here's what you or your agent should request before making an offer on any condo three stories or taller:

The milestone inspection report (Phase 1 and Phase 2 if applicable). A clean Phase 1 with no structural deficiencies is a green light. A Phase 1 that flags issues means Phase 2 is coming, and bigger costs are behind it. A building that hasn't completed its inspection when it should have is a red flag for both safety and financing.

The SIRS. Look at the funded percentage for each of the eight structural components and the remaining useful life. A roof with 3 years of remaining life and 15% funding is a special assessment waiting to happen. A building with 70%+ funding across all line items and scheduled increases to reach 100% is in good shape.

Two years of budgets and actual financials. Compare the budget to the SIRS. Are reserves actually being funded at the required level? If the budget says one thing and the bank account says another, that's a problem.

Current, pending, and anticipated special assessments. Ask explicitly. Not all assessments are posted on the MLS listing. Some are voted on but not yet collected. Some are anticipated but haven't been formally approved. You need to know about all of them.

The master insurance policy. Confirm it's with a primary carrier, not Citizens (the state-backed insurer of last resort). Check the hurricane deductible. Verify the coverage amounts meet Fannie Mae's requirements.

Delinquency rates. If more than 15% of units are 60+ days delinquent on their dues, the building may fail warrantability review. High delinquency rates also signal a building with financial stress that could lead to future assessments.

Florida law now gives buyers seven business days after receiving the association's governing documents to cancel the contract with no penalty. Make sure that clock starts from the day you actually receive the documents, not the contract effective date.

The Silver Lining

This sounds like a lot of bad news for condo buyers, and parts of it are. But there's a real upside to the SB 4-D framework.

The buildings that have completed their inspections, funded their reserves, maintained their insurance, and passed their warrantability reviews are in the strongest position they've ever been in. They have documented structural health. They have funded reserves. They have transparency. When you buy into a building like that, you're buying certainty about your carrying costs rather than waiting to be surprised by a six-figure assessment.

The higher monthly fees in a compliant building are a feature, not a bug. They mean the building is actually setting money aside for future repairs instead of pretending those repairs won't be needed. And they mean your property value is protected by a building that can be financed conventionally, which keeps your buyer pool wide when you eventually sell.

The buildings to avoid are the ones that haven't completed their inspections, haven't funded their reserves, and are sitting on deferred maintenance that hasn't been priced yet. Those buildings may look cheaper today, but the costs are coming.