Condo Financing Basics for Delray Beach Buyers

Thinking about a condo near Atlantic Ave or the beach but unsure how the financing works? You’re not alone. Condo loans follow a different playbook than single-family homes, especially in Florida. In this guide, you’ll learn what “warrantable” means, how lenders review condo associations, what down payment ranges to expect, and the local Delray Beach factors that can affect your approval and monthly costs. Let’s dive in.

Warrantable vs. non-warrantable condos

A condo’s “warrantable” status tells lenders whether it meets major program rules. If a project is warrantable, you usually have more loan options, lower down payment paths, and better pricing. If it’s non-warrantable, financing choices narrow and costs often rise.

• Warrantable condo: Meets eligibility standards used by conventional lenders that sell loans to Fannie Mae or Freddie Mac. It may also be approved for FHA or VA in some cases.
• Non-warrantable condo: Falls short on one or more rules, such as too much investor ownership, low reserves, pending litigation, or excessive delinquencies.

To check standards and project-eligibility tools, review the Fannie Mae project standards and the Freddie Mac Single-Family Seller/Servicer Guide. FHA and VA approvals are separate. You can confirm if a project is eligible by using the FHA Approved Condominium list and by asking your lender to verify VA status.

Why it matters to you:

• Warrantable status opens access to standard conventional loans with lower down payments.
• Non-warrantable status often requires larger down payments and higher rates.
• On resale, non-warrantable projects can limit your buyer pool.

What lenders review in Delray condo associations

When you finance a condo, the lender underwrites both you and the association. Expect your lender to request HOA documents early. Common review items include:

• Budget and reserves. Lenders look for a healthy operating budget and funded reserves for major repairs. If reserves are thin, expect more questions and potentially higher down payment requirements.
• Owner-occupancy and investor mix. High rental or investor concentration adds risk. Single-entity ownership (one owner holds many units) can also be a red flag.
• Assessment delinquencies. A high percentage of owners behind on dues signals cash-flow stress and may trigger a non-warrantable finding.
• Pending or current litigation. Lawsuits related to construction defects, insurance disputes, or governance can derail financing.
• Insurance coverage. Florida condos need adequate master hazard, liability, and often windstorm and flood coverage. Lenders check coverage types, limits, and deductibles.
• Physical condition. Evidence of deferred maintenance or structural issues can stop a loan. Older buildings often face heightened scrutiny.
• Commercial space. Projects with substantial non-residential space get extra review.

These reviews typically require the HOA budget, financials, reserve schedule or study, master insurance declarations, bylaws, recent meeting minutes, and an estoppel certificate.

Typical loan programs and down payments

Exact requirements change, and lenders can add their own overlays. Use these ranges as a starting point and verify with your loan officer.

Conventional (Fannie Mae/Freddie Mac)

• Primary residence in a warrantable project: as low as 3% with select programs, but many lenders expect 5% to 10% for condos in practice.
• Second homes: often 10% or more.
• Investment condos: commonly 15% to 25%, sometimes higher depending on the building.
• Associations are reviewed for reserves, owner-occupancy, delinquencies, litigation, and insurance.

FHA loans

• Minimum down payment is typically 3.5% for a primary residence if the condo is FHA-approved.
• FHA does not insure second-home or most investor purchases.
• If the building is not FHA-approved, FHA financing is generally not available.
• Check the FHA Approved Condominium list before you get too far.

VA loans

• Eligible veterans may finance with 0% down if the condo project is VA-approved or eligible for single-unit approval.
• VA also reviews association health, insurance, and litigation risks.
• Ask your lender to verify VA project status early in your search.

Jumbo and portfolio loans

• Higher-priced condos and luxury buildings are often financed with jumbo or portfolio programs.
• Expect stricter reserve and insurance standards and larger down payments.

Non-warrantable condos

• Conventional/FHA/VA financing may not be available.
• Portfolio lenders may offer loans but with larger down payments, often 20% to 30% or more, and higher rates.

Local factors that affect Delray Beach condo loans

Delray Beach’s coastal setting and building mix can influence condo financing. Keep these local factors in mind:

• Building age and inspections. Many buildings are older. After the Surfside tragedy, lenders and insurers often request more documentation on structural integrity and major repairs.
• Insurance environment. Florida has elevated wind and hurricane risk, which impacts master policy costs and deductibles. Unit owners may also need their own policies. For broader state insurance context, see the Florida Office of Insurance Regulation.
• Flood zones and storm surge. If the building sits in a FEMA flood zone, lenders usually require flood insurance. Check the FEMA Flood Map Service Center and ask for quotes early in underwriting.
• Special assessments. Coastal projects may fund big repairs through assessments. Active or planned assessments matter for affordability and loan approval.
• Second-home concentration. Near the beach and Atlantic Ave, second-home and investor activity can be high. Those purchases often require larger down payments and more conservative underwriting.
• Florida condominium law. Governance and reserve requirements fall under the Florida Condominium Act (Chapter 718). Post-Surfside legislation affects reserve funding and inspections, which can influence financing.

Your step-by-step condo financing game plan

Use this sequence to reduce surprises and keep your closing on track:

1. Get fully preapproved with a lender experienced in Florida condos. Ask about condo overlays and recent deals in Delray Beach.
2. Confirm your loan type fit. If you want FHA or VA, verify project approval up front to avoid dead ends.
3. Write a contract with a financing contingency that allows time for a condo project review. Two to four weeks is common for the review window.
4. Request HOA documents immediately after contract acceptance. The sooner your lender sees them, the better.
5. Have your lender start the condo project review as soon as the documents arrive. This step is required to close.
6. Price out insurance early. Get homeowners (HO-6), windstorm, and flood quotes to confirm true monthly costs.
7. If the project is non-warrantable, discuss alternatives early. Options may include higher down payment, a portfolio loan, or negotiating seller credits.

What to collect from the HOA early

Gather these items as early as possible to help your lender clear the project review:

• Current operating budget and recent financial statement.
• Reserve study or reserve schedule with account balances.
• Master insurance policy declarations showing coverage and deductibles.
• Bylaws, declaration, and rules, including rental policies and special assessment procedures.
• Meeting minutes from the past 6 to 12 months.
• Estoppel certificate confirming dues status and any pending assessments.
• List of pending litigation or insurance claims.

Cost checks that protect your approval

A clean approval is about more than the interest rate. Double-check these items before you remove contingencies:

• Insurance premiums. Florida master policies and unit policies can be higher than you expect. Ask for windstorm and flood quotes up front.
• Special assessments. Confirm who pays any approved or pending assessments at closing and whether your lender requires escrow for them.
• HOA dues and reserves. Make sure the budget supports routine maintenance and long-term repairs without constant special assessments.
• Rental rules. If you plan to rent seasonally, confirm any minimum lease terms or caps that could affect your plans and underwriting.

Make your offer competitive and safe

You can present a strong offer without taking unnecessary risk:

• Include a reasonable financing contingency with time for the condo review.
• Provide a strong preapproval letter from a lender familiar with Palm Beach County condos.
• Offer a clear timeline for HOA document delivery so your lender can start quickly.
• Consider flexibility on closing date if the association needs time to provide documentation.

When you’re ready to tour condos near the beach or downtown, our team can help you focus on buildings that fit your loan type and budget, and coordinate with your lender to speed up the condo review. If you want a clear, step-by-step plan from first showing to closing, connect with Sommar Clark.

FAQs

How do I tell if a Delray Beach condo is warrantable?

• Ask your lender to run a condo project review and check Fannie Mae and Freddie Mac eligibility. For government loans, confirm status on the FHA Approved Condominium list and through your lender for VA.

What down payment do I need for a Delray Beach condo?

• Conventional warrantable condos often require 5% to 10% for primary residences, 10% or more for second homes, and 15% to 25% for investments; FHA-approved condos allow about 3.5% down for primary residences; non-warrantable condos often need 20% to 30% or more.

Can I use FHA or VA for a condo in Delray Beach?

• Yes, if the project is approved; use the FHA Approved Condominium list for FHA, and ask your VA lender to verify VA project approval or single-unit options.

Do I need flood insurance for a Delray Beach condo loan?

• If your building is in a FEMA-designated flood zone, lenders typically require flood insurance; check the FEMA Flood Map Service Center and get quotes early to confirm monthly costs.

How long does a condo project review take in Florida?

• Plan for 2 to 4 weeks depending on HOA responsiveness, the building’s age and complexity, and any follow-up items from the lender.

What if the association has pending litigation or low reserves?

• Lenders may require a larger down payment, special documentation, or deny conventional/FHA/VA financing; discuss options with your lender, including portfolio loans or negotiating seller credits while issues are resolved.