Can You Get a Conventional Mortgage on a Sarasota or Manatee Condo?

Why does the building matter as much as your credit score?

Most buyers think a mortgage approval is about their own income, credit, and down payment. With a condo, there is a second approval hiding underneath: the condominium project itself. A lender that plans to sell your loan to Fannie Mae has to look at the association, its finances, its legal situation, and its physical condition, not only at you.

That is why two buyers with the same credit score can get different answers on two different buildings in Sarasota or Manatee County. This post explains what Fannie Mae’s Selling Guide actually says about condo projects, what can knock a building out, and what to ask before you fall in love with a unit. It covers Fannie Mae’s rules only. Other loan programs and some lenders apply their own project rules, so ask which ones apply to your loan.

What does Fannie Mae check about a condo project?

Fannie Mae’s rules sit in its Selling Guide, and they are written for lenders. The general rule is plain: before delivering a loan secured by an individual unit in a project, the lender must determine that the project meets Fannie Mae’s eligibility requirements. On its full review page, Fannie Mae sets several tests. No more than 15% of the total units may be 60 days or more past due on common expense assessments, which are the HOA fees. The same 15% limit applies to units that are 60 days or more past due on each special assessment. And the lender must review the association’s projected budget to confirm it funds replacement reserves for capital expenditures and deferred maintenance at a level that is at least 10% of the budget. The lender figures that by dividing the annual budgeted replacement reserve allocation by the association’s annual budgeted assessment income. A lender may use a reserve study instead of that 10% calculation if it was completed within three years of project approval and prepared by an independent third party with reserve-study expertise (Fannie Mae, full review process).

Check the application date. Fannie Mae has announced that the minimum reserve allocation for applicable projects increases from 10% to 15% of annual budgeted assessment income beginning January 4, 2027. Ask the lender to apply the requirements for your loan and project review, including the reserve-study alternative and adequate funding of the study’s recommendations. Fannie Mae explains the reserve change here.

What can make a condo building ineligible?

Fannie Mae keeps a list of ineligible project characteristics. Several of them are about the building’s situation rather than your finances: projects in need of critical repairs, including material deficiencies and significant deferred maintenance; projects where a single entity owns more than 20% of the units in a project of 21 or more units; projects where the total nonresidential or commercial space is more than 35%; projects managed and operated as a hotel or motel; timeshare, fractional, or segmented ownership projects; and projects with mandatory fees for amenities owned by an outside party such as the developer or builder. The list also includes projects in which the HOA is named as a party to pending litigation, or in which the sponsor or developer is named in pending litigation that relates to the safety, structural soundness, habitability, or functional use of the project (Fannie Mae, ineligible projects). Whether a particular case triggers that item is a question for your lender to answer from the Selling Guide, not something to guess at from a listing.

A lawsuit does not automatically make a project ineligible. Fannie Mae permits qualifying minor litigation under specified conditions. Give the lender the actual pleadings, insurance information, and association counsel’s explanation so it can determine whether an exception applies.

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How can you find out before you make an offer?

Fannie Mae tracks project status in a system called CPM, and the status wording matters. “Unavailable” means the project has been determined by Fannie Mae to be ineligible, and loans for units in it cannot be sold to Fannie Mae. “Conditional Approval” means loans cannot be sold until an Approved by Fannie Mae status has been issued. “Guide Ineligible” means that, based on information the lender entered, loans in the project are not eligible for sale. Fannie Mae also notes that loans in some projects may be limited to certain occupancy types, such as principal residences only, or may carry limits on loan-to-value ratios (Fannie Mae, project status definitions). Your lender has to look the building up. We can help you gather the documents that lender will ask for, and our post on condo reserves, SIRS, and milestone inspections explains the paperwork behind the reserve question.

What if the building fails one of the tests?

A building that fails today is not always out forever. Fannie Mae’s general project standards address loans secured by units in a project that fails its requirements as of the note date, and describe those loans as eligible for delivery after the project comes into compliance. The details are for your lender to apply, and a fix-it timeline is not a plan to count on. If your closing date is fixed and the building is not approved, ask your lender what other options exist for your loan, and compare them honestly. Our post on FHA versus conventional loans in Florida covers the loan-type trade-offs, and our guide to competing with cash offers on Sarasota condos covers how financing affects your offer. Read the downsides of buying a condo in Florida before you commit to any building.

How to Protect Yourself Before You Commit

1. Ask your lender about the project before you tour: Ask whether the lender plans to sell your loan to Fannie Mae and whether they can check the building’s project status early.
2. Get the association budget: Ask for the current budget and look at how much is set aside for replacement reserves. Fannie Mae’s test compares the budgeted reserve allocation to budgeted assessment income, with a 10% minimum.
3. Ask about unpaid dues: Ask management how many owners are behind on regular and special assessments. Fannie Mae’s test is 15% of units, 60 days or more past due.
4. Ask about litigation: Ask whether the association, its sponsor, or its developer is named in any pending lawsuit, and what it is about.
5. Ask about repairs and assessments: Ask for recent inspection reports and board minutes, and ask whether repairs are deferred or funded. Fannie Mae lists critical repairs and significant deferred maintenance as ineligible.
6. Do not waive financing protections early: Keep your financing protections in your contract until your lender confirms the building. Have your agent and lender agree on dates in writing.

Why does working with a local agent help on a condo purchase?

A condo purchase involves the association’s records as well as the seller’s. Our team asks for those records early, reads them with you, and helps you take the right questions to your lender before you commit money to inspections or appraisals. We are not lenders, and we do not make loan decisions, but we can keep you from finding out about a building problem after you have already spent time and money on it.

Before you make an offer on a condo in Sarasota or Manatee County, call your lender and ask them to check the building. Then call Michael Renick at 941.400.8735 and we will help you collect the budget, reserve, and litigation answers so your offer is based on a building that can actually be financed.

About the Author

I’m Michael Renick — a Florida West Coast broker with over 15 years guiding families through some of the biggest decisions of their lives. I’ve built my practice on hard work, honesty, and total transparency. No shortcuts, no spin — just straight answers, deep market knowledge, and the dedication my clients deserve from start to close.

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Equal Housing Opportunity. This article is general information only, not legal, tax, insurance, or financial advice. Market conditions, insurance requirements, and costs vary by property and transaction; confirm your specific situation with the appropriate licensed professional. Michael Renick, Licensed Florida Real Estate Broker, License #BK3241900, licensed by the Florida Department of Business and Professional Regulation (DBPR). Mangrove Realty Associates Inc — each office is independently owned and operated.

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