Shopping for a condo in Downtown Miami? Your loan approval may hinge on something you never see during a showing: the building’s HOA reserves. If reserves are thin or major repairs are looming, lenders often pull back, and deals slow or stall. You deserve clarity before you fall in love with a view. In this guide, you’ll learn how reserves, inspections, and recent Florida rules shape mortgage options, plus what to check before you write an offer or list your unit. Let’s dive in.
What HOA reserves mean to your loan
Reserves are funds the association sets aside for big-ticket repairs like roofs, elevators, and structural work. A professional reserve study estimates remaining useful life and replacement costs, then suggests annual contributions. Florida’s condo law defines required reserve accounts and structural integrity reserve studies, which drive how much a building should set aside each year. See the current statute for how reserves and studies are handled statewide. Florida Statutes, Chapter 718.112
Lenders review these numbers because underfunded buildings are risky. If a tower needs major work and does not have reserves, owners may face large special assessments that strain budgets and raise default risk. Agency buyers of loans, including Fannie Mae, require projects to meet reserve and maintenance standards before they will buy a mortgage secured by a unit in that building. Fannie Mae Selling Guide — Project Review
The 10% reserve benchmark and other tests
Most conforming lenders look for a budget that contributes about 10% of annual assessment income to reserves. If the budget shows less, lenders often ask for a recent reserve study that supports a lower number. Without that support, project approval can be delayed or denied for conforming loans. Fannie Mae Selling Guide — Project Review
Underwriters also consider:
- Percent funded: how much cash is in reserves versus the study’s recommended balance.
- Unfunded repair cost per unit: large gaps per unit raise red flags.
- Delinquencies and litigation: higher delinquency or major suits can reduce eligibility.
New Florida and Miami-Dade rules raising the bar
After the Surfside tragedy, Florida strengthened condo safety and reserve rules. Many associations must complete structural integrity reserve studies and maintain specific reserve accounts linked to those findings. These updates affect Downtown towers and shape lender reviews. Florida Statutes, Chapter 718.112
Miami-Dade also updated its building recertification program. Many buildings now face a 30-year initial recertification and every 10 years after that, which can trigger milestone inspections and required repairs. Those reports often drive higher reserves or special assessments. Miami-Dade Building Recertification
Insurance costs across Florida have also climbed, pushing associations to raise assessments and adjust reserves. That can change monthly carrying costs and influence lender underwriting for Downtown Miami condos. Associated Press reporting on Florida condo costs
How low reserves can derail financing
When lenders find “significant deferred maintenance” or official directives to cure safety issues, many conforming loans are not allowed until repairs are completed and documented. That can freeze financing options for an otherwise attractive building.
What buyers see
You may need a larger down payment, a portfolio loan with a higher rate, or all cash. Approvals can take longer due to extra project review. In some cases, lenders decline altogether until the association provides updated studies, budgets, and proof of completed work. Fannie Mae Selling Guide — Project Review
What sellers feel
Fewer buyers qualify with low-cost, conforming financing when a project is flagged. Days on market can stretch, and pricing power may shift. Proactive documentation and clear repair plans help keep the largest buyer pool engaged.
Workarounds and paths to yes
Buildings can restore eligibility by:
- Updating reserve studies and increasing contributions to align with recommendations.
- Levying special assessments to seed reserves or fund repairs.
- Using association loans or lines of credit allowed under Florida law to finance mandated work, with clear documentation of scope, contracts, and timelines. Florida Statutes, Chapter 718.112 (2025 updates)
- Completing required repairs and providing engineering reports, paid invoices, and meeting minutes that confirm progress.
Some lenders and agencies also use project review tools and may grant waivers when credible funding and repair plans are in place. Freddie Mac Condo Project Advisor FAQ
What to check before you write an offer
If you are buying in Downtown Miami, ask for a finance-focused packet early. Review:
- Most recent approved budget and the reserve line item. Is it near 10% of assessment income, or supported by a recent reserve study?
- Current reserve balances and percent funded.
- Latest reserve or structural integrity reserve study and date.
- Milestone, recertification, or engineering reports and any official directives.
- Board meeting minutes from the last 6 to 12 months for special assessment discussions.
- Details on special assessments, loans, or lines of credit and collection status.
- Association insurance policies and deductibles.
- Assessment delinquency rates.
Use your lender’s project review early to avoid surprises. Fannie Mae Selling Guide — Project Review and Miami-Dade Recertification are helpful context.
Preparing to list your Downtown Miami condo
If your association is near a recertification or mid-project, get in front of lender questions. Assemble a finance due diligence packet that includes the budget, reserve study, bank statements, insurance, engineering reports, board minutes, and special assessment details. Fannie Mae Selling Guide — Project Review
Work with your board or manager to document a credible plan: funding sources, executed contracts, repair timelines, and progress photos or invoices. Florida statutes allow associations to use loans and lines of credit for required work, which can help maintain project eligibility when paired with clear documentation. Florida Statutes, Chapter 718.112 (2025 updates)
Your next step
You should not have to guess whether a building’s reserves will make or break your loan. For a clear path to financing-ready Downtown listings and curated towers with strong documentation, connect with Miami Rental Queen with Leni Giraldo for concierge guidance, off-market options, and a seamless process.
FAQs
How do HOA reserves affect condo loans in Downtown Miami?
- Lenders check whether the budget contributes about 10% to reserves or is backed by a recent reserve study, and they review inspection and repair history before approving conforming loans. Fannie Mae Selling Guide — Project Review
What is the 10% reserve rule for condos?
- It is a common underwriting benchmark for annual reserve contributions; projects below that often need a current reserve study to justify lower funding. Fannie Mae Selling Guide — Project Review
How does Miami-Dade recertification impact financing?
- The 30-year initial and 10-year follow-up cycle can trigger inspections and required repairs, which influence reserves, assessments, and loan eligibility. Miami-Dade Building Recertification
Can special assessments help a project qualify for loans?
- Yes. When assessments seed reserves or fund documented repairs, projects can regain eligibility, especially when statutes allow association loans or lines of credit to bridge funding. Florida Statutes, Chapter 718.112 (2025 updates)
Are FHA loans available if reserves are low?
- FHA project approval also looks for adequate reserve funding, often around 10% unless a recent reserve study supports a lower amount, and it reviews overall building health before approval. HUD guidance on condo project approval
