Buying a Florida condo: your down payment and the building's paperwork

Your half of the deal: the down payment

The offer's in. You've already decided which end of the balcony gets the morning coffee and which end gets the sunset. Then a question lands that you didn't see coming: how's the building doing?

Not the unit. The building. Its savings, its unpaid dues, its lawsuits, its last checkup.

That's the part of condo buying that never makes the listing photos.

Think of it this way: with a condo, the building is your co-signer. (Not literally. It won't sign anything, and it definitely won't chip in on the bills.) A lender checks you, and then it checks the building, because your loan rides on both. That can feel like your purchase is in the hands of a board you've never met. It's less mysterious than it sounds, once you know what's being checked.

Your half comes first. The Florida condo down payment requirement starts with the same question as any home: how will you use it?

The first two come from Fannie Mae's Eligibility Matrix for a one-unit purchase. The third is what several investor lenders publish for condos. FHA and VA loans can work for condos too, with their own building approval rules.

Your cash to close covers more than the down payment, too; Florida closing costs walks through the rest. But your down payment is only half the picture. The other half belongs to your co-signer.

1. Two reviews

A condo loan checks both you and the building.

2. 10% reserves

Fannie Mae looks for at least 10% of the budget going to reserves.

3. Every 10 years

Milestone inspections and reserve studies repeat on a 10-year cycle.

Your co-signer's background check

Before a lender can sell a condo loan to Fannie Mae, it checks the project, usually starting with a questionnaire filled out by the condo association or its manager. Call it your co-signer's application. Fannie Mae's rules look at:

• Reserves: the association's budget sets aside at least 10% for replacement reserves. (Your co-signer keeps a rainy-day fund.)
• Dues: no more than 15% of units are 60 or more days behind on assessments. (Its neighbors pay what they owe.)
• Litigation: the association isn't in pending litigation over the building's safety, structure or habitability. (Nobody's suing it over whether it's standing up straight.)
• Single-entity ownership: in a project with 21 or more units, one owner holds no more than 20% of them. (No single person owns too big a slice of your co-signer, which is a strange sentence to write about anyone.)
• Commercial space: no more than 35% of the space is used for nonresidential or commercial purposes. (It isn't secretly a strip mall.)
• Hotel-style operation: the project isn't run like a hotel. (And it isn't a hotel wearing a condo costume. More on condotels below.)

A building that clears these is often called "warrantable," meaning it fits Fannie Mae's rules. One that doesn't is "non-warrantable." That label is about the building, not about you. It changes which loans fit, not whether you can buy.

The checkup Florida now requires

After the 2021 Surfside collapse, Florida added two building-safety requirements that now show up in condo financing. (No jokes in this section. It matters too much.)

Milestone inspections. Think of this as your co-signer's required physical. Condo buildings three habitable stories or taller need a milestone inspection by December 31 of the year the building turns 30, and every 10 years after that. Local officials can move the first one up to 25 years for buildings near salt water.

Structural integrity reserve studies. The same buildings need a study at least every 10 years that looks at the roof, structure, fireproofing and other key parts, and plans the savings to fix them. It's the building's long-range savings plan for the big stuff. Existing associations had until December 31, 2025, with a final outside date of December 31, 2026 when the study is done alongside a milestone inspection.

So why does this land on your loan? Fannie Mae treats a project that failed a mandatory structural-safety inspection, or that faces unfunded repairs of more than $10,000 per unit due within 12 months, as a project in need of critical repairs. That makes it ineligible for Fannie Mae financing until it's resolved. Sea walls, balconies, elevators and parking structures are on Fannie Mae's own list of things to look at.

That sounds heavier than it is.

The most important paperwork in a Florida condo purchase isn't yours. It's the building's.

When the building gets turned down, you don't

Plenty of good Florida buildings miss one of Fannie Mae's rules. One investor owns too many units, the restaurant downstairs takes up too much space, or a lawsuit is still open. That takes agency financing off the table for now, but it doesn't take the condo off the table.

It's a co-signer one lender won't accept and another one will. Other loan types are built for exactly these buildings, including portfolio loans (loans a lender keeps on its own books instead of selling) and non-QM loans (loans made outside the standard federal "qualified mortgage" checklist), and for investors, DSCR loans in Florida. They usually ask for more down than an agency loan, and each looks at the building its own way.

Finding out late is how a dream unit turns into a scramble against a closing date, and nobody wants to spend the week before closing on hold with a property manager.

Condotels: the co-signer with a side hustle

A condotel is a condo building that runs like a hotel: front desk, rental program, somebody handing out pool towels. Fannie Mae treats a project as a hotel if, among other things, the association is licensed as a hotel or resort, owners are restricted from using their own unit part of the year, or owners have to put their unit in a rental pool or share rental profits.

Those buildings are ineligible for Fannie Mae financing. That doesn't mean they can't be financed. It means the loan comes from a specialty program, typically with more down and its own review of the building.

Nobody should meet their co-signer for the first time at the closing table.

So if a beach condotel is on your list, it's worth a conversation, and a proper introduction to the building, before you fall in love with the view.