Check the HUD condo lookup for FHA approval, then have a local lender screen the building against Fannie's rules. Scaffolding, unfunded critical repairs over $10,000 per unit, thin reserves, or an all-cash sales history signal trouble. The association's questionnaire, often returned 20 days later, is the common deal-killer. Non-QM financing remains the fallback when a project fails.


Why Even Experienced Agents Get Caught

Condo financing failures rarely announce themselves early. A building can look healthy on paper and still fail at the last step. On the Discover South Florida Podcast, Larry Mastropieri shared a deal that surprised even him.

"We thought we were going to be Fannie approved. Come to find out, one little thing in the condo questionnaire derailed it, and they're technically on the Fannie Mae blacklist because of this thing."

The timing made it worse than the outcome. His team learned the truth only after the association returned the paperwork.

"We didn't know until the questionnaire was completed by the association and sent back to our lender. That was 20 days later."

Is the Building on the FHA Approved List?

FHA financing starts with a simple lookup that costs nothing. HUD maintains a searchable database of approved condominium projects by state, county, or ZIP code. An approval expires roughly every three years, so a listing you find may already be stale.

Approved projects have declined sharply across South Florida since 2021. Associations struggling with insurance costs and reserve requirements often let their certification lapse. Buyers using FHA financing in Broward County should confirm status before touring anything.

What FHA Requires From the Building

  • At least 50% of units occupied as primary residences or second homes.
  • No more than 15% of owners delinquent 60 days or more on dues.
  • At least 10% of the annual budget allocated to reserves.
  • Commercial space generally capped at 35% of total floor area.
  • No single investor owning more than 10% of units in projects above 20 units.
  • No significant litigation, especially construction defect or structural claims.

Single-Unit Approval as a Backup

A buyer can pursue approval for one unit inside an unapproved project. Your lender submits HUD Form 9991 with association documents for review. The building must contain at least five units to qualify.

This path is narrower than most buyers expect. The project still must meet the owner-occupancy standard and stay free of significant litigation. Single-unit approval solves a paperwork gap, not a troubled building.

What Changed Under the New Fannie Rules

Fannie Mae issued Lender Letter LL-2026-03 in March 2026, and Freddie Mac matched it the same day. The changes tightened conventional condo lending considerably. Every buyer in this market should understand three of them.

Limited Review Is Gone

Lenders once used a streamlined path that skipped deep financial analysis on established projects. That option no longer exists for projects above ten units. Full Review now applies, which means the association's finances, reserves, and repair status all face scrutiny on every loan.

The $10,000 Per Unit Repair Threshold

Identified critical repairs now carry a hard dollar test. A project becomes ineligible when unfunded repairs to critical components exceed $10,000 per unit. Picture a 100-unit building facing a $1.2 million roof replacement with no reserve allocation. That works out to $12,000 per unit and disqualifies the entire project.

Reserve Requirements Are Rising

The reserve funding minimum moves from 10% to 15% of annual budgeted assessment income. That change takes effect January 4, 2027, and it will reclassify buildings that pass today. An association may substitute a reserve study, though only one completed within three years and funded at the highest recommended level.

Ready to buy a condo in Delray Beach, West Palm Beach, or Boca Raton? We check the building's financing history and put a condo-desk lender on it before your inspection period starts running. Call The Mastropieri Group at (561) 544-7000.

Red Flags You Can Spot Without a Lender

Certainty is impossible early, though obvious problems reveal themselves. Larry sets a realistic expectation for buyers.

"It's hard to know 100%, but it is easier to eliminate the obvious ones."

The most visible warning sign stands right in front of you.

"If there's scaffolding on a building, there's a high probability you can't get a conventional loan on it, because if work's in progress they're typically not going to loan on it."

Several other signals deserve the same attention during a showing.

  • Scaffolding, netting, or visible concrete restoration work underway.
  • A recent or pending special assessment tied to structural repairs.
  • Public notices of a milestone inspection with outstanding findings.
  • Deferred maintenance visible in garages, walkways, and balconies.
  • A high share of units listed for rent, which strains owner-occupancy ratios.

Read the Sales History Before You Write an Offer

The MLS holds a free diagnostic that most buyers never run. Pull the closed sales in the building and examine the financing terms on each one. A pattern emerges quickly when a project has lending problems.

"If this building has other units that have had financing, you can see on the multiple listing service what terms it was. Cash, cash, cash, cash. Everything's cash. You're like, okay, what's going on here?"

An all-cash sales history rarely reflects buyer preference. It usually means conventional financing stopped working in that building. That single check can save you weeks of wasted effort across Palm Beach County and Delray Beach.

Ask Everyone, Then Verify Everything

Larry's process starts with questions and ends with documents. He does not treat any single answer as reliable.

"Ask the realtor. Don't trust the realtor. Ask all the other realtors in the building. Don't trust any of them either. Then get docs and do a gut check with the lender."

His skepticism came from experience on that very deal. The listing agent had sold multiple units in the same building.

"He didn't know, or he claims he didn't know. I kind of pushed him on that a little bit. I'm like, dude, come on."

An agent may genuinely be unaware, since financing status changes quietly. Your protection comes from documents and a lender's review, not from assurances.

Why a Local Lender With a Condo Desk Matters

The lender you choose can determine whether you learn about a problem early or late. Larry is direct about the difference.

"If you're buying in Florida and you got a lender in California, good luck. I don't know what to tell you."

Specialists in this market keep running records on individual buildings. That institutional memory saves buyers real money.

"You want this local expert mortgage broker that has a condo desk, where they're focused on doing this. They can quickly be like, no, that one doesn't work. It's on our no list."

A strong broker also reviews the association documents alongside you. They flag problems before your inspection period expires, not after. That early warning protects buyers throughout Broward County and Palm Beach.

"They'll look at all the docs and then they'll be like, nope, this is a problem."

The Condo Questionnaire Decides Everything

Conventional financing hinges on a form the association completes, not on your credit. Fannie uses Form 1076 and Freddie uses its own version. The questions cover reserves, delinquencies, litigation, insurance, and any critical repairs.

Larry describes this document as the last obstacle in every condo deal.

"If it passes all those tests, it's still a risk because of the condo questionnaire. That's where you're going to find the final lynchpin usually."

Why a Clean Building Can Still Fail

The building in his story presented well by every visible measure. Nothing in the physical inspection suggested a financing problem.

"Painted, concrete restoration done, assessment paid for, financials looked pretty good. They had 12 or 15% reserves. It all looked pretty clean."

The failure came down to wording on a single form. Answers that seem minor can trigger an automatic rejection.

"The way it was worded and the questions were answered, there were a couple questions that just made Fannie say, nope, this doesn't qualify."

Worth noting: reserves at 12% clear today's 10% standard but fall below the 15% minimum arriving in 2027. Buildings passing now may not pass next year.

What Happens If the Building Cannot Be Financed?

An ineligible project does not always end the transaction. Alternative financing exists, though it costs more than a conventional loan. Larry pivoted quickly once he had the answer.

"You can get a non-QM loan, which is what we did with this buyer as soon as we figured it out, and then we renegotiated the deal a little bit."

Three paths remain open in these situations.

  • Non-QM or portfolio loans held by the lender instead of sold to Fannie.
  • Cash purchase, which is why so many units in troubled buildings sell that way.
  • A renegotiated price reflecting the smaller buyer pool the building now faces.

The renegotiation piece matters most. A building that cannot be financed conventionally is worth less, and your offer should reflect that reality.

Protect Your Contract While You Investigate

Good timing saved Larry's client from losing a deposit. The questionnaire arrived late, yet the contract still had protection in place.

"We did our inspections. We had everything good. We were fortunately still in the loan commitment period."

Your financing contingency is the safety net during this process. Negotiate enough time for the association to return documents, since two to three weeks is common. Never let that deadline pass while you wait on a questionnaire.

Why South Florida Faces the Toughest Conditions

State law and lending rules collided in this market at the same moment. Florida requires milestone structural inspections and fully funded reserves for older buildings three stories and taller. Associations must now disclose repair obligations that lenders treat as disqualifying.

The result is a long list of buildings that cannot secure conventional loans. More than 1,400 Florida condo projects sit on Fannie Mae's unavailable list. Buyers looking at older buildings in Palm Beach Gardens and coastal markets face this constantly.

Questions to Ask Before You Go Under Contract

  • Is this project on the FHA approved list, and when does that approval expire?
  • Has any unit in this building closed with conventional financing in the past year?
  • Does the association have a completed milestone inspection with outstanding items?
  • What percentage of the annual budget currently funds reserves?
  • Is there a pending special assessment, and does it cover structural work?
  • How quickly does this association typically return a lender questionnaire?

Condo Financing Checklist

  • Search the HUD condo lookup before you tour, since FHA approval is public.
  • Review closed sales in the building and note how each one was financed.
  • Hire a local mortgage broker with a dedicated condo desk and a current no list.
  • Request the budget, reserve study, and milestone inspection early in your contract.
  • Push the association to return the questionnaire well inside your contingency window.
  • Ask your lender about non-QM options before you need them, not after.

These lending rules change frequently, and this page describes general requirements. A licensed Florida lender should confirm eligibility for your specific building.

Find Out If the Building Is Financeable Before You Fall in Love

A condo purchase can collapse over one line on a form the seller never sees. We check the building's lending history, connect you with brokers who track these projects daily, and push the association for documents early. That work happens before your money and your contingency period are at risk. Reach out to The Mastropieri Group, Realtors®. Call (561) 544-7000. Send us the building name and we will tell you what we know about its financing.

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