Are you eyeing a Pompano Beach condo and wondering why your lender keeps asking about HOA reserves? You are not alone. With new Florida inspection rules and many older coastal buildings in Broward County, reserve funding can make or break a loan. In this guide, you will learn how reserves and inspections affect approvals, what lenders look for, and the steps to keep your deal on track. Let’s dive in.
Why HOA reserves matter
Lenders evaluate the condo building, not just your finances. Most conventional programs expect the association’s budget to allocate at least 10% to reserves or to have a recent reserve study that supports a lower amount. You will see this in agency rules from Fannie Mae’s project standards, Freddie Mac’s condo guidance, and FHA’s financial stability criteria in the HUD handbook and regulations, which often use the 10% benchmark or a current reserve study as an alternative (FHA/HUD references).
If a project fails these standards or has serious deferred maintenance, many lenders will not approve the loan for agency sale or insurance. That can limit your financing options and increase costs.
Florida SIRS and milestone inspections
After the Surfside tragedy, Florida created milestone structural inspections and a Structural Integrity Reserve Study, or SIRS, for buildings three stories or higher. The SIRS identifies key structural items and limits an association’s ability to waive reserves for those components. These changes are outlined in statewide summaries of SB 4‑D and related rules.
In Broward County, longstanding recertification programs work alongside the state requirements. Municipal programs outline inspection timelines and follow-up for repairs. You can review a local municipal program example on Broward municipal building safety pages to understand how notices and deadlines typically work.
Common red flags that derail loans
- Less than 10% of the budget going to reserves without a current reserve study that justifies it. Agencies often want an up-to-date study if reserves are lower than the benchmark.
- Unfunded or critical repairs that exceed common underwriting thresholds, often cited around $10,000 per unit, which can render a project ineligible with many investors.
- Large or pending special assessments without a clear funding plan, litigation tied to safety or habitability, or inadequate master insurance. These create project risk and can stall approvals. See lender updates on these issues in agency guideline summaries.
What this means in Pompano Beach
Many South Florida condos were built from the 1960s through the 1990s, which means more buildings are reaching inspection milestones. Associations that underfunded reserves may now need higher assessments to comply. That is exactly what lenders scrutinize, and it can make some buildings harder to finance, as highlighted in recent news coverage of condo financing challenges.
Expect extra project review on older coastal buildings in Pompano Beach, especially if milestone inspections or SIRS are due or recently completed.
What lenders check first
- Reserve funding level or a current reserve study supporting lower funding
- Recent engineering or structural reports and any noted deterioration
- Insurance adequacy and association delinquencies
- Special assessments, their size, timing, and payment status
Agency rules require lenders to assess the project, not just the unit. See the overview in Fannie Mae’s project standards.
Buyer due diligence checklist
- Budget and reserve study. Ask for the approved operating budget and the latest reserve study. If the budget does not show a 10% reserve line, request a current study that justifies the level of funding. Check recency and author credentials. Review benchmarks in Fannie Mae’s guidance.
- SIRS and milestone status. Confirm whether milestone inspections and the SIRS are complete, and whether any phase 2 work was required. Review the scope of structural items covered by SIRS in this statewide summary.
- Board minutes and plans. Read recent board minutes for plans to fund repairs, association loans, or assessment schedules.
- Special assessments. Get all details on amount, timing, and whether the seller has paid in full. Lenders may require proof of payment or capacity to pay. See lender update notes on assessments in this legal summary.
- Insurance certificates. Review master policy coverage and deductibles for compliance with lender guidelines.
- Delinquency stats. Ask for the percentage of owners more than 60 days late on dues.
- Pending litigation. Find out if there is litigation tied to safety, structural issues, or solvency.
Seller strategies that build confidence
- Compile documents early. Provide budgets, the reserve study, SIRS, milestone reports, insurance certificates, and assessment details up front to reduce lender back-and-forth.
- Show a funding plan. If reserves are below target or repairs are needed, share a clear board-approved plan to fund the work.
- Meet disclosure requirements. Florida has added disclosure rules when milestone inspections or SIRS are required or completed. Review current language and timing in recent Florida bill text and amendments.
Financing paths if a building fails
If a condo project does not meet agency standards, some lenders may offer portfolio or non-agency options with higher rates or larger down payments. On rare occasions, lenders can seek project exceptions, but documentation is extensive and outcomes vary. You can read an overview of evolving condo lending practices in this industry summary.
Timeline tips for Pompano closings
- Bring your lender in early to run a project review before you fall in love with a unit.
- Ask the association about inspection schedules or recertification notices so you can plan around deadlines.
- Build in time for document requests and lender questions, especially on older coastal buildings.
- If agency approval looks uncertain, compare non-agency quotes in parallel so you can pivot quickly.
Ready to navigate Pompano’s condo landscape with an experienced coastal advisor at your side? Reach out to Tatsiana Tobina-Fotiou LLC for clear guidance, local insight, and a smooth path to your next home.
FAQs
Can I get a conventional loan if HOA reserves are below 10%?
- Possibly, but you will likely need a current reserve study that justifies lower funding, and the project must still meet the rest of the agency’s standards described by Fannie Mae and Freddie Mac.
What if a Pompano condo’s milestone inspection is pending?
- Florida requires milestone inspections and SIRS for qualifying buildings; lenders often want to see results, so timing can affect approvals. Review requirements in this statewide summary and ask the association for status.
How do special assessments affect loan approval in Pompano?
- Large or pending assessments can reduce affordability and trigger extra scrutiny; lenders may require proof of payment arrangements or may decline loans if the impact is material, per lender update summaries.
Are FHA loans available in older Pompano condos?
- Yes, if the project meets FHA’s financial and documentation standards, which often look for 10% reserves or a current reserve study; see FHA references in HUD regulations.
What should a seller provide to help a buyer’s lender?
- Share the operating budget, reserve study, SIRS and milestone reports, insurance certificates, and any special assessment details early; Florida disclosure rules are outlined in recent bill amendments.
