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Condo Financing Requirements

FYI - Banks and Mortagers are under close scrutiny to make sure all t's are crossed and all i's dotted. If you haven't bought a home in a while, you'll be surprised at the hoops everyone has to jump through: not just you, but the bankers, too. I'll be here to help you through the process. We WILL get through it! Here are the latest condo financing rules:

CONDO FINANCING –Primary, 2nd home or investment

For 5% to 20% down:  require full review (condo docs, budget & master insurance policy, adequate reserves, etc ). ! Requires copies of decs/by laws, budget, any additional docs per FNMA request.

 For the LIMITED REVIEW it is 25% down for owner occupied and 30% down for a second home. The LIMITED IS A MUCH EASIER PROGRAM

HO6 insurance is required for the buyer on all condos:  “walls in coverage” unless master policy provides the same interior unit coverage. HO6 must provide replacement cost coverage is required.

Fidelity bond insurance is now required for established condo projects with 20 or more units. Coverage must be3 in an amount that covers the operating budget and reserves of the HOA. Coverage must be equal to the maximum amount of funds in the custody of the HOA and/or mgmt. company = annual budget or annual amount of assessments for all units. *reduced coverage may be accepted with specific criteria being met



No litigation

10% of the budget needs in the reserves (few exceptions)

One person cannot own more than 10% of the units

90% of the units need sold and closed only for established projects… not applicable to new

HOA needs turned over or considered “new”

100% with no additional phasing

Conversions need converted over 3 years

Full size kitchen appliances

51% of the units must be owner occupied (maximum 49% investment concentration)

Less than 15% delinquency on HOA dues

Lender is responsible for 0 - 6 months of dues if the owner defaults (not more than 6 months)

Right of 1st refusal – restrictions apply

Condo and Common Areas must be complete





A few tips for condo’s


1-“Who’s been naughty and Who’s Been Nice?”

a.Find out the delinquency rates of the present owners. If people aren’t paying their association dues on time that can be a sign of discontent or an indication that the association is under funded. No more than 15% of the total units can be in arrears (more than 30 days past due) of their association fees.


2-“How Much is in the Repair Fund?”

a.Ask if the HOA has done a budget for the previous years. The reserve fund should have 10% of the cost of deferred maintenance, such as Roofs, Roads, Tennis courts, sealing of parking lots..etc…The budget must be adequate and include line items to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condo project


3-“Can you Cover me?”

a.Get a copy of the certificate of insurance. Review to assure the master policy includes 100% of current replacement cost of the condominium; H0-6 (walls-in) coverage, if not included in the master policy and should cover the replacement of the interior improvements; Liability Insurance is required to maintain comprehensive general liability insurance covering all of the common elements, commercial space; Fidelity Bond/Fidelity Insurance is required for new and established condo projects with 20 or more units. The HOA must obtain this insurance for all officers, directors, and employees of the association. The coverage must be no less than a sum equal to three months aggregate an all units plus reserve funds.


4-“Does the Association Present Any Legal Problems?”

a.Obtain copies of any legal suits that are present with in the HOA to determine the effect the suit could have on the project.

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Rick Giles
Phone: 941-400-0848‚Äč
Email: SiestaRick@gmail.com

Bright Realty
5218 Station Way
Sarasota, FL 34232


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