Reference

Condo Financing Glossary

Plain-English definitions for the terms that come up in Miami condo financing — warrantability, reserves, DSCR, jumbo, foreign-national, and the Florida statutes that touch them.

42 terms

40-Year Recertification: Miami-Dade and Broward county building-recertification process required at 40 years and every 10 years after — distinct from but related to the state milestone inspection.

Appraisal Waiver: Agency offer to waive the full appraisal when AUS data supports value. Less common in condos than in single-family.
Asset-Depletion / Asset-Based Loan: Qualifies a borrower by amortizing eligible liquid assets into monthly income — common for retirees and high-net-worth borrowers.

Bank-Statement Loan: Non-QM income documentation method using 12–24 months of business or personal bank statements to calculate qualifying income.

Closing Costs: Lender, title, government, and prepaid charges due at closing. In Florida these include doc stamps and intangible tax.
CLTV (Combined LTV): Combined balance of all liens (first + HELOC + second) divided by property value.
Commercial Space Ratio: Share of total square footage used for non-residential purposes. Agency guidelines generally cap this at 35–50%.
Conditional / Limited Review: A streamlined Fannie Mae condo review used at lower LTVs that skips parts of the full project review. Eligibility depends on occupancy, loan purpose, and program.
Conforming Loan Limit: Annual FHFA-set maximum loan size eligible for Fannie/Freddie purchase. Miami-Dade follows the national one-unit baseline.

Doc Stamps (Florida): Florida documentary stamp tax on the deed and on promissory notes, paid at closing.
DSCR (Debt-Service-Coverage Ratio): Projected rent divided by PITIA. Investor-loan tier metric: ≥1.25 strong, 1.10–1.24 standard, 1.00–1.09 break-even, <1.00 no-ratio.
DTI (Debt-to-Income): Monthly debt obligations divided by monthly gross income. Most conventional programs cap DTI at 43–50% depending on overlays.

ECOA: Equal Credit Opportunity Act — federal law prohibiting credit discrimination on protected bases.
Escrow / Impound Account: Lender-held account that collects monthly funds for taxes and insurance and pays them when due.

Fannie Mae Form 1076: The Condominium Project Questionnaire — the standardized form lenders send to the HOA or management company to evaluate the building.
Fidelity / Crime Coverage: Insurance protecting association funds from theft or fraud. Required by agency guidelines for associations above a unit-count threshold.
FIRPTA: Foreign Investment in Real Property Tax Act — IRS withholding rule that applies when a non-US-person sells US real property.
Foreign National Loan: Mortgage for borrowers without US tax returns or traditional US credit. Documented via international credit references and source-of-funds.
Full Project Review: The complete agency condo review of HOA budget, reserves, insurance, ownership concentration, and litigation status. Required above limited-review LTV thresholds.

High-Balance Loan: A conforming loan above the baseline limit but at or below the high-cost-area ceiling. Miami-Dade currently uses the baseline limit, not a high-balance ceiling.
HO-6 Policy: The unit owner's interior insurance policy, often required by lenders in addition to the HOA master policy.
HOA Master Policy: The association's hazard, wind, flood, and liability insurance. Lenders verify coverage limits, deductibles, and named insureds before clear-to-close.
Hotel-Condo (Condotel): A condo project operated like a hotel — front desk, daily rentals, hotel licensing. Agency-ineligible; financed via portfolio or DSCR programs.

Investor / Owner-Occupancy Ratio: Share of units in a project that are non-owner-occupied. High investor concentration can limit conventional financing eligibility.
ITIN Loan: Mortgage for borrowers with an Individual Taxpayer Identification Number (no SSN), typically priced and underwritten as non-QM.

Jumbo Loan: Loan amount above the conforming limit. Underwritten under lender or portfolio guidelines rather than Fannie/Freddie.

LTV (Loan-to-Value): Loan amount divided by appraised value or purchase price (whichever is lower). Drives pricing tiers and program eligibility.

Milestone Inspection: A Florida-required structural inspection of condo buildings 3+ stories at age 30 (or 25 within 3 miles of the coast) and every 10 years after.

Non-QM Loan: Loans that don't meet the CFPB's Qualified Mortgage criteria. Used for bank-statement, asset-depletion, ITIN, foreign-national, and DSCR scenarios.
Non-Warrantable Condo: A condo project that fails one or more agency guidelines. Financing typically moves to portfolio or non-QM lenders, often at higher rates and lower LTVs.

PITIA: Principal, Interest, Taxes, Insurance, and Association dues — the full monthly housing payment a lender uses to qualify a condo loan.
Points / Discount Points: Prepaid interest, paid at closing, that buys down the note rate. One point equals 1% of the loan amount.
PUD (Planned Unit Development): A community of attached or detached homes governed by an HOA but not legally a condominium. PUDs follow lighter project-review rules than condos.

Rate Lock: An agreement to fix the loan's interest rate for a defined window — commonly 30, 45, or 60 days — at the cost of points or fees.
Reserve Study: An engineering-led report estimating long-term capital costs and the funding needed to meet them. Florida now requires Structural Integrity Reserve Studies for many condo buildings.
Reserves (Borrower): Liquid post-closing assets, measured in months of PITIA. Required amount varies by program, occupancy, and credit profile.

Single-Entity Ownership: How many units one owner controls. Most agency programs cap a single entity at 10–25% of units depending on project size.
SIRS (Structural Integrity Reserve Study): A Florida-mandated reserve study covering structural components (roof, load-bearing walls, foundation, fireproofing, plumbing, electrical, waterproofing, windows). Required for buildings 3+ stories.
Special Assessment: A one-time or scheduled charge to unit owners beyond regular HOA dues, typically to fund capital projects, repairs, or reserve shortfalls.

Title Insurance: One-time policy protecting buyer and lender from title defects discovered after closing. Florida uses promulgated rates.
TRID: TILA-RESPA Integrated Disclosure rule — governs Loan Estimate and Closing Disclosure timing and delivery.

Warrantable Condo: A condominium project that meets agency (Fannie Mae / Freddie Mac) guidelines for owner-occupancy, single-entity ownership, commercial share, insurance, reserves, and litigation — making it eligible for conventional conforming financing.

Information provided on this site is for educational purposes only and does not constitute a loan approval, loan offer, commitment to lend, or financial / legal / tax advice. Loan programs, terms, rates, costs, and eligibility vary by lender, borrower qualifications, property type, occupancy, and applicable guidelines. Visitors may be connected with a licensed mortgage professional.