A Deep Dive into Fannie Mae's Condo Project Review Process
- Philip Bennett (NMLS # 1098318)
- Mar 19, 2023
- 11 min read
Updated: Jul 27
Bennett Capital Partners Mortgage Brokers has been around long enough to witness numerous condo deals go awry across Florida and Miami, and nine times out of ten, it comes down to one thing: the condo project review process. As experts in navigating these complex approvals throughout Florida's real estate market, we've helped countless clients secure financing when others couldn't.
Fannie Mae condo project review offers the most favorable terms in the market, allowing up to 90% CLTV compared to Freddie Mac's restrictive 75% limit. This is especially valuable in Florida's competitive condo market, where understanding the difference between full and limited reviews can mean the difference between closing your deal or watching it fall apart.
Continue reading to learn the insider strategies that expedite project approval and prevent the costly mistakes that often derail applications in Miami and throughout Florida.
Disclaimer: This article is provided for informational purposes only and is not affiliated with or endorsed by Fannie Mae. The information contained herein is based on publicly available guidelines from Fannie Mae and is intended to help educate readers on their condo financing options. Bennett Capital Partners Mortgage is an independent mortgage broker and does not represent Fannie Mae or its subsidiaries. |
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The Importance of Fannie Mae's Condo Project Review Process
Fannie Mae's condo project review process matters more than most people realize. When a condo project gets Fannie Mae approval, it opens up a world of financing options that simply wouldn't exist otherwise. Think of it as a stamp of approval that tells lenders, "This project meets our standards, so you can feel confident lending here."
The process works on multiple levels. For developers, passing the Fannie Mae review means their units become much easier to sell, as buyers can access conventional financing with better rates and terms. For lenders, it provides a standardized way to evaluate risk without having to dig deep into every project detail themselves. And for buyers? It means they're not limited to financing options or higher interest rates.
What's happening here is quality control for the entire condo market. Projects that make it through Fannie Mae's review process have demonstrated they're financially stable, properly managed, and legally compliant. This creates a baseline of quality that benefits everyone involved. Without this process, the condo financing landscape would be much more chaotic and risky.
Bennett Capital Partners Mortgage Brokers has seen firsthand how this approval process can make or break a deal. A project with Fannie Mae backing has more options, and that translates into real advantages for both developers and buyers in today's competitive market.
Here are some helpful links;
Understanding the Review Process: Full vs. Limited Condo Review
Here's what you need to know upfront: Fannie Mae has two completely different approaches to reviewing condo projects, and understanding which one applies can save you a lot of headaches down the road.
The full review is exactly what it sounds like - they want to see everything. Bennett Capital Partners Mortgage Brokers has been through hundreds of these over the years, and they can be time-consuming but they're thorough for good reason.
Fannie Mae will dig into:
Project type - whether it's new construction, a conversion from apartments, or an established community
Owner-occupancy ratios - they want to see that actual owners live there, not just investors renting everything out
Assessment delinquency rates - if people aren't paying their HOA fees, that's a red flag
Insurance coverage - adequate coverage is non-negotiable
HOA budget and reserves - they want to see the community is financially healthy
You'll typically see full reviews required for new developments, recent conversions, or projects that have had issues in the past. The process typically takes 2-3 weeks if everything goes smoothly, but it may take longer if complications arise.
Limited reviews are much more straightforward - essentially a quick check on established projects with a good track record. The focus shifts to:
Project eligibility status - confirming the project still meets basic Fannie Mae requirements
Borrower qualifications - standard income, credit, and debt-to-income verification
Loan-to-value requirements - up to 75% LTV and 90% CLTV for primary residences in Florida, lower for investment properties
No budget analysis needed - they skip the deep dive into HOA finances since the project already has a clean track record.
Most of my clients prefer dealing with communities that qualify for limited review because the approval process is faster and less paperwork-intensive. These options work well for buyers who have larger down payments and want to expedite the financing process.
The key difference? Limited reviews can often be completed in days rather than weeks, which is crucial when trying to meet deadlines on time.
"After 20 years in the mortgage industry, condo project review and complex condo financing is where we excel. When realtors have a challenging deal or borrowers get turned down elsewhere, they call us. We take pride in our expertise with Florida's PERS requirements, warrantable versus non-warrantable properties, and the intricate details that make these deals work. Whether it's a new development, complicated HOA situation, or non-warrantable property requiring portfolio lending, we have the knowledge and lender relationships to find solutions. That's why we're the broker of choice when others say 'no.'" Philip Bennett, Owner & Licensed Mortgage Broker (NMLS # 1098318)
Ready to get your condo deal approved? Contact Bennett Capital Partners Mortgage Brokers at 800-457-9057.
Fannie Mae New Condo Project Guidelines
When a condo project is brand new or newly converted, Fannie Mae applies enhanced project standards. Lenders must document items like substantial completion, minimum presales to primary/second-home buyers, immediate occupancy, and specific legal protections in the HOA documents.
Florida adds another layer. While developers in most other states can submit their new projects through the standard Full Review process, Florida requires something different. Any new or newly converted attached-unit condo project in the state requires a formal Project Eligibility Review Service (PERS) approval from Fannie Mae
Here's what many people don't realize about new construction condo loans : the project approval process directly affects whether buyers can get financing at all. If Fannie Mae doesn't approve the project, buyers end up with fewer loan options and higher interest rates. That makes units much harder to sell, which is obviously bad news for developers.
Use the table below to confirm presales, completion, reserves, single-entity limits, and (in Florida) PERS.
The Step-by-Step Condo Project Review Process
Now that you understand the difference between full and limited reviews, let's walk through exactly how Fannie Mae's condo project review works in practice. This isn't just paperwork - each step can make or break your deal, so knowing what happens when is crucial.
The entire process begins when a loan officer determines if a specific condo project is eligible for conventional financing. They can't just guess - there's a specific sequence they must follow, and missing a step or doing things out of order can cause significant delays.
Step 1. Initial Eligibility Check: The loan officer reviews the basic project information, including the number of units, the type of building, and any obvious red flags that may be present. This determines whether it needs a full review or can qualify for limited review. They'll order either a Fannie Mae limited review condo questionnaire or the full review version.
Step 2. Questionnaire Submission: The HOA or management company fills out the appropriate questionnaire, and this is where issues often arise. Missing documents, incomplete financial information, or outdated insurance policies can halt everything. The lender's condo review department is very particular about having everything exactly as it should be.
Step 3. Detailed Lender Review: Once the lender receives the Fannie Mae form, their underwriters dig into the details. They're checking financial stability, legal compliance, insurance coverage - basically everything that could affect the project's long-term viability. This is where most conditional approvals happen.
Step 4. Final Decision: After the lender has completed its review, it will either approve or reject the condominium project. Approvals mean conventional financing is available. Rejection means borrowers are stuck with limited loan options. Often, there's a middle ground - conditional approval - where the lender requires additional information from the HOA before granting final approval.
Here's what most people don't realize: even after approval, things can change. If the project's financial situation deteriorates or there are significant changes to the HOA budget, the approval can be revoked. That's why Bennett Capital Partners Mortgage Brokers always recommends getting the most current project information possible before submitting any loan application.
The timeline varies significantly depending on how prepared the HOA is with its documentation. A well-organized community with current financial statements and proper insurance can get approved in days. A project with missing paperwork or financial issues? You're looking at weeks, and that's if everything eventually gets sorted out.
Navigating Condo Financing: Warrantable VS Non-Warrantable Condos
Here's where things get interesting - not all condos are created equal when it comes to financing. You've got two main categories: warrantable condos and non-warrantable condos. The difference between them can determine whether your buyer gets a great interest rate or ends up paying significantly more for their loan.
A warrantable condo is essentially a project that meets all of Fannie Mae's requirements. This includes standards related to financial stability, property management, legal structure, and insurance coverage. When a project is warrantable, buyers can get conventional financing with competitive rates and terms. It's the gold standard for condo financing.
Non-warrantable condos, on the other hand, don't meet Fannie Mae's criteria for one reason or another. Maybe the HOA budget is shaky, or there are too many investor-owned units, or the project has some legal issues. Whatever the reason, these projects can't get conventional Fannie Mae backing, which means limited loan options for buyers.
Bennett Capital Partners Mortgage Brokers deals with both types regularly, and here's what we've learned: the difference in financing options is huge. Warrantable condos give buyers access to the full range of conventional loan programs. Non-warrantable condos? You're looking at non-QM and portfolio lenders, which often have higher rates and bigger down payment requirements.
Here's something most people don't know: there's actually a warrantable condo list that lenders use, but it's not public. Only lenders with access to Fannie Mae's Condo Project Manager system can see which projects are currently approved. This is why working with an experienced mortgage broker makes such a difference - we can quickly check a project's status and know what financing options are actually available.
The tricky part is that a project's warrantable status can change. A condo that was warrantable last year might not be this year if the HOA's financial situation has deteriorated or if there have been significant changes to the project. That's why Bennett Capital Partners Mortgage Brokers always verifies current project status before submitting any loan application.
For buyers looking at non-warrantable condos, don't panic - financing is still possible, just more expensive and complicated. We work with lenders who specialize in these types of properties. You'll typically need to put down more money and have fewer loan program options, but if you love the unit and the price is right, it can still make financial sense.
The bottom line? Always check the warrantable status before you fall in love with a particular unit. Better yet, call Bennett Capital Partners Mortgage Brokers before you start shopping so you know exactly what financing options are available for different types of properties. It can save you from sticker shock and wasted time looking at units you can't actually afford to finance.
Conclusion
Here's what buyers should remember: don't try to wing it with Fannie Mae's condo project review process. Whether it's a full review, limited review, or dealing with Florida's PERS requirements, understanding what's involved upfront makes all the difference.
Yes, the condo project review system can be annoying with all its paperwork and hoops to jump through. But there's a method to the madness - it ensures borrowers are making a safe investment. The review process identifies red flags, such as financial instability, deferred maintenance, mismanaged HOAs, and insurance gaps, that could turn into expensive headaches later.
Bottom line: these details can torpedo deals if buyers aren't careful. Bennett Capital Partners Mortgage Brokers has seen people waste months chasing units they'll never be able to finance properly. Condo project review might not be the most thrilling subject, but it's absolutely critical to understand. Working with someone who's been through this process before - someone who knows the ins and outs, not just the basics - can save significant time and money.
FAQ's
What is a condo project review and why is it important?
A condo project review is Fannie Mae's evaluation process to determine if a condominium development meets their lending standards. This review is crucial because it determines whether buyers can access conventional financing with competitive rates. Projects that pass review become "warrantable," offering buyers more loan options and better terms than non-warrantable properties.
How long does the Fannie Mae condo project review process take?
The timeline for condo project review varies significantly based on the review type and project documentation. Limited reviews for established communities can be completed in 3-7 days with proper documentation. Full reviews typically take 2-3 weeks for straightforward projects, but can extend to 6-8 weeks if additional documentation is required or issues arise during the evaluation process.
What's the difference between FNMA condo review and Fannie Mae condo project review?
FNMA (Federal National Mortgage Association) and Fannie Mae refer to the same organization, so these terms describe identical processes. Both refer to the condo project review conducted by Fannie Mae to evaluate and approve condominium projects for conventional financing eligibility.
What are the main reasons condo projects get rejected during review?
Common rejection reasons include insufficient owner-occupancy ratios (below 51%), high HOA assessment delinquency rates (over 15%), inadequate insurance coverage, insufficient reserve funds, pending litigation affecting the project, and non-compliant legal documentation. In Florida, failure to obtain PERS approval for new projects is another frequent cause of rejection.
Can a condo project's warrantable status change after approval?
Yes, warrantable status can change based on the project's evolving financial and legal conditions. Factors like increased delinquency rates, budget shortfalls, litigation, or significant changes to HOA management can cause a previously approved project to lose its warrantable status. This is why Bennett Capital Partners Mortgage Brokers always verifies current project status before loan submission.
What's the difference between full review and limited review for condos?
Full review is a comprehensive evaluation required for new developments, recent conversions, or projects with past issues. It examines all aspects including finances, legal compliance, and management. Limited review is a streamlined process for established projects with good track records, focusing primarily on basic eligibility confirmation and borrower qualifications.
Do all states have the same condo project review requirements?
No, requirements vary by state. Florida has the most stringent requirements, mandating that all new or newly converted condo projects go through the PERS (Project Eligibility Review Service) process instead of standard review. Other states can use the regular Full Review process for new developments.
What financing options are available for non-warrantable condos?
Non-warrantable condos require alternative financing through portfolio lenders or non-QM loan programs. These typically feature higher interest rates (often 0.5-1.5% above conventional rates), larger down payment requirements (usually 20-25% minimum), and stricter qualification criteria. While more expensive, financing is still available for qualified borrowers.
How can I check if a condo project is warrantable?
The warrantable condo list is not publicly accessible - only lenders with access to Fannie Mae's Condo Project Manager (CPM) system can verify current project status. Working with experienced mortgage brokers like Bennett Capital Partners Mortgage Brokers provides immediate access to this information and current project approval status.
What documents are needed for condo project review?
Required documentation typically includes HOA financial statements, budgets, reserve studies, insurance policies (master policy and fidelity bond), legal documents (declaration, bylaws, CC&Rs), management agreements, and assessment delinquency reports. The specific requirements depend on whether it's a full or limited review process.
Philip Bennett
(NMLS # 1098318)
Philip is the owner and Licensed Mortgage Broker at Bennett Capital Partners, LLC (NMLS # 2046862). He earned a Bachelor’s degree in accounting and finance from Binghamton University and a Master's in finance from Nova Southeastern University. With more than two decades of industry leadership, Philip has successfully guided thousands of clients through complex mortgage transactions.
Learn more about Philip Bennett’s background on our Founder’s page. Whether you’re a first-time homebuyer or a seasoned real estate investor, we are here to help you reach your goals. Don’t wait - contact us today and let us help you find the right mortgage for your needs.
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