Borrowers are turning in growing numbers to the space amid rising conservatism of other lenders
Florida’s housing market is facing a slew of challenges – particularly in the condo space, where surging maintenance fees, insurance costs, and other regulatory considerations are causing plenty of headaches for homeowners and buyers alike.
That reality is also seeing lenders tighten access to credit and reducing the number of loans Fannie Mae and Freddie Mac are willing to consider, meaning homebuyers and other borrowers are turning in growing numbers to the non-QM space for solutions.
Those trends have developed since the Surfside condo collapse in 2021, a tragedy followed by the introduction of new rules – which came into effect at the beginning of this year – requiring structural inspections and reserve funds for potential repairs – seeing demand for older, more vulnerable properties plunge.
Lending in the state has since evolved enormously during those four years. “The lending community ratcheted up the requirements for what they want to review,” Craig Garcia (pictured top) of Capital Partners Mortgage Services told Mortgage Professional America. “So the amount of documentation that we’d be typically looking at for a condo for many years just went through the roof. It’s definitely been challenging.
“We’ve tried to lean into it: right now in our market, 50% of the listings are condos so it’s not something we can avoid. We have to get as good as we can at trying to figure out which direction we need to go in right away. There’s been a big spike in the amount of condominium loans that we do through alternative lending sources, not Fannie Mae and Freddie Mac.”
The good news is that borrowers, brokers and lenders have adjusted to that new reality, even if it means plenty more work than usual throughout the entire process, whether originating the loan or getting a deal over the line.
“What we try to do is get as much information about what’s going on in the project up front and then let people know, ‘Hey, these look like the options that would be available to you,’ and then proceed accordingly,” Garcia said.
“But the amount of effort and work that goes into trying to be a resource to buyers and real estate agents in the condo community has been a lot.”
The national average age for first-time homebuyers is nearing 40, but the picture varies by state. Hunter Bolling, a Dallas-based mortgage broker, shares his experience with younger buyers in Texas compared to other regions. https://t.co/t3ycW62RCK
— Mortgage Professional America Magazine (@MPAMagazineUS) May 22, 2025
Insurance costs add to growing headaches in Florida market
The stricter legislation on condo safety and upkeep arguably should have been put in place years before, Garcia said, requiring condo associations to put away reserves for what they might need to repair in the future.
Beforehand, they might have been able to kick the can down the road – but requirements now are far stricter, while Garcia said insurance often represents one of the most challenging costs for buyers.
“If it’s a newer property, it’s probably easier to get insurance on. In addition to all the stuff that [owners] are required to save for now, insurance costs have gone up quite a bit and it’s become a lot more challenging for the older buildings,” he said.
“[When they] get to a certain age you’re required to get certain inspections done and pass recertifications, and that can vary by location.”
In many cases, that means the lending community tends to look at older buildings with greater scrutiny, although properties that have been well maintained over the decades are usually viewed favorably.
“The older the building is, the more challenging it may be. All things being equal, we certainly see some and they’ve already been through that recertification process,” Garcia said. “Some of those places are in great shape even though they’re older. But it just depends on how it’s been managed in the past 20 years.”
Changing rules will benefit market in the long run
The new regulations may be causing plenty of teething problems, particularly as Florida’s condo market lurches into bear territory. But in the long run, Garcia said they’ll be worthwhile measures as a safeguard for condo associations and buyers alike.
“A lot of these condos are going through the pain of being forced to save for the future, which is a really good thing,” he said. “At the end of the day, these condominiums are going to be in much better – and some of them already are in much better – financial shape.
“Moving forward, things might be improving for some of these people once they get over that hump of properly saving for the future and making improvements to the property, which could actually help to even reduce their insurance costs over time.”
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