Florida condo buyers squeezed by new loan, tax hurdles

The FHFA's August 2026 elimination of the limited condo review process, which previously facilitated over half of Florida's conventional condo loans through faster and cheaper approvals, is poised to significantly increase financing costs and reduce accessibility for buyers. Kimber White of NAMB warns this shift will push many into more expensive loan options, while AD Mortgage's Corey Chubner highlights that this change disproportionately affects first-time buyers and empty nesters who rely on streamlined financing.

Raising reserve requirements from 10% to 15% imposes additional financial strain on Florida condo projects and their buyers, with AD Mortgage data revealing that nearly one-third of reviewed projects fall short of the new threshold. Chubner explains that this shortfall often triggers substantial special assessments—sometimes reaching five figures—to bridge the gap, thereby compounding affordability challenges amid already rising costs.

The combined impact of eliminating the limited review and increasing reserve requirements is funneling buyers toward costlier non-QM loans, which, while viable, carry higher expenses and reduce the marketability of Florida condos. Chubner notes that borrowers unable to secure conventional financing face pricier alternatives, and the extended, more expensive full review process itself risks disqualifying projects after upfront borrower costs, leaving buyers financially exposed without property access.

Brokers and lenders like Marc Halpern, CEO of Foundation Mortgage, are navigating the tightened condo financing landscape by meticulously analyzing mandated engineering reports to pinpoint viable lending opportunities despite widespread market hesitancy. By drilling into building-specific details rather than relying on broad assessments, they can differentiate units unaffected by localized issues, enabling more precise and confident lending decisions even as the elimination of the limited condo review process stalls activity in the middle-tier market.

Halpern highlights that underwriting teams willing to look beyond headline structural problems and evaluate unit-specific conditions gain a competitive edge, especially when they maintain strong relationships with takeout lenders to negotiate nuanced deals. This approach allows Foundation Mortgage to lend on units in buildings with issues like balcony defects, provided those units are not implicated, showcasing a strategic pivot to granular risk assessment amid regulatory tightening.

Financing challenges are particularly acute for older, lower-priced condos in Miami’s interior neighborhoods, where associations often face a dearth of traditional bank financing for critical repairs. As a result, some are turning to private money loans, with Halpern noting that Foundation Mortgage has been approached directly to fill this gap, underscoring how non-QM lenders are increasingly stepping into roles vacated by conventional banks constrained by new reserve and review requirements.

The Florida Association of Mortgage Professionals (FAMP), led by President Orlando Diaz, is championing a constitutional amendment on the November 2026 ballot designed to phase in higher homestead exemptions and ultimately eliminate property taxes on a portion of primary residences. Diaz emphasized that while interest rates and housing prices are beyond legislative control, property taxes and insurance are levers that can be adjusted to alleviate financial strain on buyers and existing condo owners, making tax reform a critical component of addressing Florida's housing affordability crisis.

To mitigate potential unintended consequences such as an influx of migrants from high-tax states that could further inflate home prices, the proposed amendment includes a five-year residency requirement for new arrivals and safeguards for essential public services like education. Despite these measures, the amendment faces a steep hurdle requiring a 60% supermajority to pass, alongside mounting opposition campaigns warning that cuts to vital services may ensue, fueling legal challenges and voter apprehension.

Rising property taxes have increasingly burdened Florida homeowners, particularly retirees on fixed incomes, who often find their tax and insurance payments rival or exceed their mortgage costs. This growing financial pressure has intensified calls for tax relief through the amendment, as many elderly residents risk being priced out of their homes amid escalating costs, underscoring the urgency behind FAMP's advocacy efforts.

FAMP’s push for property tax reform is part of a broader strategy that also targets regulatory challenges, including changes to FHFA condo rules, reflecting a comprehensive approach to Florida’s housing affordability issues. By addressing both tax burdens and financing obstacles, FAMP aims to create a more accessible and sustainable housing market for residents navigating rising costs and complex regulations.