How Lenders Evaluate Surf Club Budgets, Reserves and Insurance

Buying or selling at Surf Club and wondering why lenders care so much about the HOA budget and insurance? You’re not alone. Financing a condo depends on more than your credit score. Lenders also judge the building’s financial health and risk profile. In this guide, you’ll learn exactly what they look for at Surf Club, how Florida rules come into play, and what you can do to keep a loan on track. Let’s dive in.

How lenders review the HOA budget

Lenders evaluate the operating budget to see whether the association is planning for future repairs and maintaining the property. They look for a consistent allocation to replacement reserves and compare that to recent studies and bank balances. They also scan for special assessments and whether the association relies on them to fund routine needs. These items help lenders gauge future risk to owners and the project’s marketability.

Reserve funding expectations

Many lenders use GSE guidance that flags budgets contributing less than about 10 percent of assessments to reserves unless a current reserve study supports a different plan. You may see underwriters ask for either the 10 percent allocation or a recent, credible reserve study that shows equivalent protection. See how this shows up in Fannie Mae’s condo project full review and Freddie Mac’s condo FAQ on reserves.

Reserve studies and Florida SIRS

Florida requires associations to maintain reserves for capital items and to calculate them based on useful life and replacement cost. For buildings three stories or higher, Florida also requires a Structural Integrity Reserve Study (SIRS) on statutory timelines, often coordinated with milestone inspections. Lenders expect to see current studies or proof that reserves meet program standards under Florida Statute 718.112 and the milestone inspection rule in Florida Statute 553.899.

Insurance coverage lenders expect

Oceanfront settings like Surf Club bring higher wind and potential flood exposure, so lenders read the insurance fine print. They review the master property policy for coverage scope, valuation basis, deductibles, and carrier strength, and they confirm flood insurance where required. If interior finishes are not covered by the master policy, lenders often require buyers to carry HO‑6 coverage for walls‑in protection.

Master policy at replacement cost

GSE and FHA rules call for master policies written to replacement cost, not actual cash value. Underwriters typically request the policy declarations and endorsements to confirm required perils and limits. You can find the replacement‑cost expectation in HUD’s condominium approval guidance and Fannie Mae’s master policy requirements.

Wind and named‑storm deductibles

High wind or named‑storm deductibles are a common reason Florida projects are flagged. As a rule of thumb, Fannie Mae caps the master policy deductible at 5 percent of the policy’s coverage amount for required perils. Multiple deductibles that exceed this for a single loss can be problematic unless certain per‑unit coverage conditions are met. See Fannie Mae’s deductible guidance.

Flood insurance at oceanfront properties

If any part of the project or units fall within a FEMA Special Flood Hazard Area, lenders require flood insurance that meets federal and investor standards. That can include coverage on common elements and, in some cases, unit policies with acceptable forms and limits. Review Fannie Mae’s flood insurance requirements to understand how underwriters size coverage.

Red flags that can stall financing

A few patterns tend to pause or block loans until resolved:

• Unfunded critical repairs over $10,000 per unit expected within 12 months. Projects in this situation are often deemed ineligible until repairs are funded and completed. See Fannie Mae’s ineligible project criteria.
• Low reserve funding without a current reserve study validating it. Lenders typically want about 10 percent of assessments to go to reserves or an equivalent plan supported by a study. See Fannie Mae’s full review.
• Delinquencies over 15 percent of units 60+ days late on assessments.
• Large or recurring special assessments, especially if tied to structural or life‑safety items with no completed remediation.
• Insurance gaps, high wind deductibles, or carriers that do not meet minimum financial‑strength ratings.

What buyers and sellers should gather early

Getting documents upfront can save weeks in underwriting. Ask the association or manager for:

• Current approved operating budget and recent bank statements showing reserve balances.
• Most recent reserve study and, if applicable, SIRS and milestone inspection reports with status of any recommendations.
• Master policy declarations, endorsements, certificate of insurance, and the insurer’s financial‑strength rating.
• Written details on any past, current, or planned special assessments and their purpose.
• Litigation summary, investor‑owned percentages, and units owned by a single entity or the association.
• The completed condo questionnaire used by your lender’s investor. See the document set lenders request in Fannie Mae’s condo project review guidance.

2025 Florida updates lenders are watching

In 2025, Florida adopted changes designed to add flexibility, including extended timelines, the ability for associations to use lines of credit or loans in certain cases, and narrow conditions to pause or reduce reserve contributions after milestone inspections. These changes can shape an association’s funding plan, which lenders will evaluate alongside investor rules. For a summary of the updates, see the Governor’s office release on relief measures for condo owners here.

What this means at Surf Club

Surf Club’s oceanfront location and building age mean lenders will pay close attention to reserves, inspection reports, and insurance. Public listings indicate the buildings were constructed in the early 1990s, which places them within Florida’s milestone and SIRS timelines if three or more stories. Flood‑zone designations may vary by building and even by stack, so do not assume every unit shares the same requirements. The safest move is to confirm the latest budget, reserve balances, inspection status, and insurance before you list or write an offer.

Ready to move forward with confidence at Surf Club? Let’s review the right documents early, coordinate with your lender, and position your purchase or sale to sail through underwriting. For tailored guidance and hyperlocal insight, connect with Goodman Group Luxury Real Estate.

FAQs

What documents will my lender ask for when buying a Surf Club condo?

• Expect the current HOA budget, reserve study or SIRS, bank statements showing reserve balances, master insurance policy and endorsements, any special assessment details, litigation summary, investor‑ownership data, and the completed condo questionnaire.

How much of the Surf Club budget should go to reserves for lending?

• Many lenders look for about 10 percent of assessments to go to reserves unless a recent independent reserve study supports a different funding plan aligned with project needs.

Do Surf Club buyers need HO‑6 insurance if the master policy is strong?

• Often yes; if the master policy is not walls‑in, lenders typically require a unit HO‑6 for interior finishes and may want loss‑assessment coverage to help with master policy deductibles or assessments after a covered loss.

How do Florida milestone inspections and SIRS affect loans at Surf Club?

• Lenders review completed reports and expect funding and timelines for any recommended work; outstanding critical repairs or missing required studies can delay or block loan approval.

Can a high wind or named‑storm deductible derail financing at Surf Club?

• It can; lenders often follow a 5 percent cap on master policy deductibles for required perils, and higher deductibles may require changes or added per‑unit coverage to proceed.