Florida the Sunshine State with Different Condo Rules

By: Stephanie Diana Wilson

Based on questions I have been getting not just at work but; from other friends who work in the mortgage field a blog post on Florida Condo Underwriting guidelines since they differ greatly from condos anywhere else in the country. Or as one of my friends in the mortgage industry says, “OK it is time that we have a coming to Jesus on this topic.

Now for our usual CYOB (Cover Your Own Behind) please be sure to check with your lender or realtor professional to verify any updates to the guidelines or how the guidelines may affect your individual circumstances. Remember always consult your local Real Estate professional or Underwriter.

With that out of the way let’s discuss Condos in Florida. Florida’s real estate market has been hit really hard not only by climate change but also by the financial crisis of 2008. Only now is the state of Florida starting to come out of the abyss. And only now are the HOA’s starting to run their projects in line with the idea in mind that they need to make their projects saleable to lending agencies.

However, as Condos are a great and smart investment for borrowers they can be a risky investment for lenders. If the project is not running properly financially or keeping up with repairs at best lenders have a marketability issue in the event of foreclosure at worse they have a safety issue making the project non saleable. Because of this lending agencies have installed underwriting guideline rules on Loan To Value Ratios (LTV) that are different in Florida compared to the rest of the country.

Florida-Condos.jpg (1000×750)

Credit to below picture to Florida-Condos.jpg (1000×750)


First let’s clarify what LTV is exactly. LTV or again Loan To Value ratio in a nut shell is the amount of deposit that is brought in and the total ratio it is to the total value of the loan. So, if a borrower comes in with a 10% down payment that means the loan has a 90% LTV as 10% of the total value was brought in by the borrower. Another example is where a borrower comes in with 3% down on a down payment assistance plan (like here in California we have CALHFA) which calculates to an LTV of 97%. Basically; the higher the down payment on a loan, the lower the LTV is on the subject loan.

All this being said the max LTV’s for limited review on established projects are as follows in Florida:

Occupancy type Max LTV

Owner Occupied unit


2ND Home


Investor / rental

Not eligible for limited review

The rest of the country’s LTV guidelines requirements for established projects are as follows:

Occupancy type Max LTV

Owner Occupied unit


2ND Home


Investor / rental

Not eligible for limited review

So, in Florida a higher deposit is required in order to do a limited review. Now a limited review is done on established attached projects. We can tackle the topic of detached vs. site condos another day. We will also tackle further in another article about new construction in Florida. But, lets cover what a limited review is and why it is important that a higher deposit is required in Florida to do said review.

A limited review on an established project is a brief look at the project as certain things are not asked on the short form used for limited review. You can find Fannie Mae’s full review/ long form, and limited review/ short form standardized HOA cert at https://www.fanniemae.com/singlefamily/project-eligibility . One of the questions not asked on a short form is how many units are delinquent in HOA dues 60+ days and items like how many units are rental units and second homes? These are considered lower risk because the borrower came in with more down payment.

Full review on an established project includes how many units are in the project, investor concentration, etc. Also, the full review includes a review on the budget which includes making sure the HOA is not spending more than they are making. Also, the budget review includes an analysis of if the HOA is allocating 10% of the total dues to reserves and if not is the HOA following a reserve study that meets guideline requirements or not? It can be more involved and the HOA may or may not be following guidelines. Also, the amount of delinquencies in the project could also create an issue as agency guidelines require no more than 15% delinquency otherwise a PEW waiver may be need. Creating an added risk on a loan with a lower deposit.

Now the reason that this is a “Coming to Jesus” topic is that these LTV guidelines are based on the location of the subject unit not the location of the lender or broker’s office. Unfortunately, this can cause confusion for the loan originators. So, there should be emphasis for loan originators who do loans in Florida even when they are located outside of Florida reviewing the guidelines regarding geographical location and LTV in the guidelines. Not only will this help to prepare the borrower for what info will be pulled but also help to properly plan for how long it will take to get the loan cleared. Florida is still a Condo Land but; to underwrite there you got to remember the LTV guidelines.

If this article helped you remember sharing is caring. Also, feel free to suggest Condo questions you want to see addressed.


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