Shopping for a Bonita Bay condo and hearing about the “10% reserves rule”? That single line in an HOA budget can decide which loans you can use, your down payment, and how fast you close. When you understand it, you can write a stronger offer, choose the right lender, and avoid last‑minute surprises. Here is what the rule means in Florida, how it shows up in Bonita Bay, and the exact documents to review before you buy. Let’s dive in.
The 10% reserves rule explained
The 10% rule is simple in practice: many lending programs look for a condominium association budget that sets aside at least 10% of annual assessment income for replacement reserves. If the current approved budget does not show this contribution, financing options often narrow.
- Fannie Mae requires budgets to fund replacement reserves at a minimum of 10% of the total budget. If the budget fails this test, the project can be ineligible for many conventional loans tied to Fannie Mae. Fannie Mae’s Selling Guide details the review.
- FHA generally expects adequate reserves and typically applies a similar 10% contribution test during condominium approval, which influences which buyers can use FHA financing.
- Freddie Mac still allows more flexibility in some cases. With a current, compliant reserve study, Freddie may accept less than a 10% budgeted contribution for certain projects. That path requires precise documentation. Industry guidance summarizes the Freddie Mac approach.
Why do lenders care? Underfunded reserves often lead to large special assessments or delayed repairs, which raise risk for loans secured by units in the building. The 10% test is one indicator of a community’s financial health.
Florida rules after Surfside
Florida strengthened condominium laws after the Surfside tragedy. Today, many associations must keep dedicated reserve accounts for key capital items and complete structural integrity reserve studies for qualifying buildings. These rules tie budgets to useful‑life estimates and require more formal planning. You can review the statute text in Florida Statutes Chapter 718.
Lawmakers also adjusted timelines and funding tools to balance safety and cost. Recent updates give some associations flexibility, such as the ability to use loans or adjust deadlines in limited cases. Coverage of the legislative changes explains how Florida is refining the post‑Surfside framework.
Why this matters in Bonita Bay
Bonita Bay includes established high‑rise and mid‑rise buildings, plus low‑rise options with resort‑style amenities. State rules, inflation, and insurance costs have combined to push many associations in Southwest Florida to raise fees or adopt special assessments to meet inspection and reserve demands. Local reporting has highlighted rising costs across the region.
For you, this means two things:
- Financing will focus on the building’s budget, reserves, and any known repairs.
- Carrying costs can change as associations fund reserves and planned work.
When you know the numbers early, you can choose the right loan program and plan your total monthly cost with confidence.
How the 10% rule affects your loan
Financing eligibility and speed
If the HOA budget does not show at least 10% of assessments going to reserves, many conventional and FHA options may be off the table. Some lenders can still finance with Freddie Mac if a recent, independent reserve study meets strict standards, but expect extra steps and more review.
Down payment and interest rate
When a project is not eligible under common investor rules, lenders may ask for a higher down payment, a higher rate, or they may decline the loan. FHA’s Single‑Unit Approval exists in limited cases and has its own caps and conditions. HUD’s update on Single‑Unit Approval explains the framework.
Reserves vs. reserve study
The 10% rule is about the budgeted annual contribution, not the reserve bank balance. Some programs also look at overall reserve sufficiency and percent funded, but the budget line drives many decisions. See a plain‑English overview of how reserve funding impacts eligibility in this reserve study resource.
Other underwriting checks
Lenders also look at owner‑occupancy levels, delinquency rates, litigation tied to structural issues, and recent or pending special assessments. Projects with critical deferred maintenance are often ineligible until issues are resolved. National association guidance outlines these red flags.
What to request before you write an offer
Ask for these documents up front. A clean package can save you weeks.
- Current approved HOA budget. Confirm the reserve contribution equals at least 10% of total assessment income and is clearly labeled. See what lenders verify in Fannie Mae’s project review guide.
- Most recent reserve study. Check the date and who prepared it. If the budgeted contribution is below 10%, your lender may rely on a compliant study for Freddie Mac in limited cases.
- Recent financials and reserve balances. Compare actual reserves to the study’s plan and the budget.
- Board meeting minutes. Look for planned repairs, votes on reserve funding, or any special assessments.
- Master insurance declarations. Pay attention to coverage limits and wind or hail deductibles, which lenders review.
- Any notices of special assessments, liens, or open structural or habitability issues.
Verification tools you can use today:
- FHA buyers can check a building’s status using the HUD condo search tool.
- Your lender will run a formal project review using Fannie Mae’s guidelines or Freddie Mac standards.
A quick Bonita Bay buyer checklist
- Confirm the HOA’s 10% reserve contribution in the current budget.
- Review the latest reserve study and planned projects for your building.
- Ask your lender early about Fannie, Freddie, or FHA pathways for the specific project.
- Price in potential special assessments and insurance deductibles.
- Build timelines that allow for condo questionnaire and project review.
Work with a team that knows the rules
In Bonita Bay, the right preparation can be the difference between a smooth closing and a delayed one. If you want a second set of eyes on the budget and reserve study, introductions to condo‑experienced lenders, or guidance on how to structure your offer, connect with J2 Luxury Group. Our boutique, consultative approach helps you move with clarity and confidence.
FAQs
What does the 10% reserves rule mean for a Bonita Bay condo loan?
- Lenders often require the HOA budget to contribute at least 10% of assessment income to reserves; if it does not, many conventional and FHA options may not be available, and underwriting may take longer.
Can I finance a Bonita Bay condo if the budget shows less than 10%?
- Possibly, but choices narrow; Freddie Mac may consider a recent, compliant reserve study, while Fannie Mae and FHA typically expect the full 10% budget contribution.
How do Florida’s post‑Surfside laws affect my purchase?
- Florida now requires reserve accounts for key items and structural integrity reserve studies for many buildings, which puts more focus on HOA funding and repair planning during lender review.
Where can I check FHA approval for a Bonita Bay building?
- Use HUD’s official condo search tool to see a building’s FHA status before you write an offer.
What else do lenders review besides reserves?
- They also check owner‑occupancy, delinquency levels, litigation tied to structural issues, insurance, and recent or pending special assessments, any of which can affect eligibility.
