Question 1 · Loan-program approval
Is the project FHA- or VA-approved, or will it need a conventional (warrantable) review or an FHA single-unit approval?
Why it matters for the loan
The building has to qualify, not just the buyer. FHA loans need the project on HUD's approved list, or a single-unit approval where that's possible. VA loans need the project accepted by VA. Conventional loans need the lender's project review to meet Fannie Mae or Freddie Mac standards, often called "warrantable." If the building doesn't qualify for the buyer's loan type, the loan can't close as planned.
What to ask the association or listing agent
Red flags
- An FHA or VA buyer, and the project isn't approved (HUD shows Rejected, Expired or Withdrawn, or no record)
- The association or management company won't complete a lender questionnaire
Sources: HUD FHA condominium approval search · VA Loan Guaranty condo report · Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects
Question 2 · Milestone inspection and SIRS
Has the association completed its milestone inspection and structural integrity reserve study (SIRS), and are any special assessments planned?
Why it matters for the loan
Florida requires milestone structural inspections for condo buildings three or more habitable stories tall (by the end of the year the building turns 30, then every 10 years; locally it can be 25) and a SIRS at least every 10 years. Fannie Mae's guide says lenders must review a structural or mechanical inspection completed within 3 years of the project review, and that a project needing critical repairs, or one that failed a mandatory structural inspection, is ineligible until the repairs are done. Lenders also review each special assessment: its purpose, amount, remaining balance and payoff date.
What to ask the association or listing agent
Red flags
- Phase 2 found substantial structural deterioration and repairs haven't been scheduled or started
- A special assessment for critical repairs where the issue isn't fixed yet
- An evacuation order, or a failed mandatory structural inspection
Sources: Florida Statutes s. 553.899 (milestone inspections) · Florida Statutes s. 718.112 (budgets, reserves, SIRS) · Florida DBPR SIRS reporting · Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects
Question 3 · Reserves and budget
Does the association's budget fund reserves the way current Florida law and the loan program require?
Why it matters for the loan
Under Florida law, for budgets adopted on or after December 31, 2024, an association that must have a SIRS generally may not vote to waive or reduce reserves for the SIRS items, or use those reserves for other purposes. For a conventional Full Review, Fannie Mae requires the budget to put at least 10% toward replacement reserves (or an acceptable reserve study that supports the funding). Underfunded reserves often turn into special assessments, which change the buyer's monthly cost.
What to ask the association or listing agent
Red flags
- Reserves for SIRS items waived or underfunded
- Reserve allocation under 10% of the budget with no acceptable reserve study (conventional Full Review)
Sources: Florida Statutes s. 718.112 (budgets, reserves, SIRS) · Fannie Mae Selling Guide B4-2.2-01, Full Review Process
Question 4 · Flood zone and insurance
What do the master policy, the buyer's HO-6 and flood insurance look like?
Why it matters for the loan
Lenders review the association's master insurance, and the buyer usually needs an HO-6 policy for the inside of the unit. If the building is in a FEMA high-risk zone (zones starting with A or V), flood insurance is required for federally backed loans. Fannie Mae notes that projects in high-risk flood zones with more than 25% commercial space may need supplemental or private flood coverage. Insurance costs count in the buyer's payment and debt-to-income ratio.
What to ask the association or listing agent
Red flags
- Master policy lapsed, cancelled, or not available in writing
- A high-risk flood zone with no building flood policy in place
Sources: FEMA Flood Map Service Center · Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects
Question 5 · Litigation, rentals, commercial space and ownership
Is the association in litigation, and does the building have rental, commercial-space or single-owner issues?
Why it matters for the loan
These are common reasons a building is "non-warrantable" for conventional loans. Fannie Mae's guide lists as ineligible: pending litigation naming the association (or the developer) that relates to safety, structural soundness, habitability or functional use, with exceptions for minor matters; more than 35% commercial or nonresidential space; a single entity owning more than 20% of the units in projects of 21 or more units (more than 2 units in projects of 11 to 20 units); projects run like a hotel, or with mandatory rental pooling; and mandatory memberships or recreational leases with an outside party. Rental rules matter too: an investor buyer needs to know whether the association limits leasing.
What to ask the association or listing agent
Red flags
- Litigation over structural, safety or habitability issues
- More than 35% commercial space, or hotel-style operations and rental pooling
- One owner holding more than 20% of the units (21+ unit projects)
Sources: Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects