Condo critical repairs are repairs that significantly affect a building's safety, soundness, structural integrity, or habitability. When a project needs them and has not made them, Fannie Mae will not buy a loan secured by any unit in that project. Not the worst unit in the building. Any unit. Conventional financing stops for the entire project until the work is finished and documented.
This is the flag that kills deals late, because it has nothing to do with your borrower profile and nothing to do with the unit itself. It is a finding about the building. It usually surfaces when the lender finally reads the association's answers, weeks into escrow, after the appraisal money is spent. The evidence was sitting in the association's own records the whole time. Here is how to read for it first.
The short version
- Critical repairs affect safety, soundness, structural integrity, or habitability. A project that needs them is ineligible until they are completed and documented.
- Unfunded repairs costing more than $10,000 per unit and due within the next 12 months disqualify a project on their own.
- A special assessment does not clear the flag. If the assessment funds critical repairs and those repairs are not finished, the project stays ineligible.
- The signal shows up in board minutes, the reserve study, and the assessment resolution long before any lender asks a question.
What counts as condo critical repairs
Fannie Mae's ineligible projects guidance sets the standard, and the language is broader than most buyers expect. A project is ineligible when it needs repairs or replacements that significantly impact safety, soundness, structural integrity, or habitability.
Underneath that, the specifics:
- Material deficiencies that, left uncorrected, have the potential to result in or contribute to critical element or system failure within one year.
- Mold, water intrusion, or potentially damaging leaks affecting the project's buildings.
- Advanced physical deterioration, which in practice tends to mean load-bearing structures, roofs, balconies, foundations, and parking structures.
- A failed mandatory inspection. Any project that did not pass a state, county, or other jurisdictional inspection or certification specific to structural safety, soundness, and habitability.
- Unfunded repairs over $10,000 per unit that should be undertaken within the next 12 months.
That last item is the one worth memorizing, because it is arithmetic rather than judgment. Divide the cost of the known-but-unfunded work by the unit count. Cross $10,000 and the project fails, no matter how sound the rest of the building is or how strong the borrower looks.
Two clarifications that matter when you are screening. Routine maintenance is not a critical repair. Repainting, resurfacing a pool deck, replacing carpet in a corridor, and scheduled component replacement funded out of reserves are ordinary operations. And a project under an evacuation order for an unsafe condition is ineligible until the condition is remediated and the buildings are deemed safe to occupy. Freddie Mac maintains parallel standards, so switching agencies is not a workaround.
Critical repairs vs significant deferred maintenance
These are two separate findings, and knowing which one a building has tells you roughly how long you would be waiting.
Critical repairs are specific and often fixable. One failed inspection item, one leak, one balcony finding. The project is ineligible until that item is corrected and the correction is documented. Timelines vary widely, but a discrete repair with funding in place is a matter of months.
Significant deferred maintenance is the heavier label. It covers deficiencies severe enough to affect the safety, soundness, structural integrity, or habitability of the improvements, situations where full or partial evacuation is required for more than seven days or for an unknown period, and buildings needing substantial repair and rehabilitation across many major components. A project in that condition is not eligible until the required repairs are made and documented, and "many major components" is rarely a one-season problem.
For an investor screening a shortlist, the practical difference is simple. A critical-repair finding is a timing question you might be able to price. A significant-deferred-maintenance finding is a hold on the whole building, with an exit problem attached: your buyer three years from now needs a warrantable project too. This is one of several document-side triggers that make a building non-warrantable, and it has become one of the most common.
Where the flag lives in documents you can get early
The association will not volunteer this. Nobody on a board is eager to write down that their building has a habitability problem. But the trail is there, and four documents carry most of it.
Board meeting minutes, last 24 months. The single best source. Repairs get discussed, deferred, re-quoted, and deferred again in the minutes before they ever reach a questionnaire. Read for engineer walkthroughs, contractor bids that never became a project, and any motion tabled for funding. A board that has discussed the same roof three times has a repair it cannot pay for.
The reserve study. Look past the percent-funded number to the component schedule. Any major component with remaining useful life at or near zero and no funding plan is a candidate for the $10,000 per unit test. Our post on HOA reserve fund health covers how to read the funding side of that document.
The special assessment resolution, if one exists. Read it for what the money is for, not just what it costs. Language about structural work, envelope repair, or code compliance is the tell.
References to inspection or engineering reports. Lenders may request structural and mechanical inspection reports completed within the past three years. If the minutes or the reserve study mention a report you were not given, request it by name. A refusal is itself information, and it is also the same information the lender will chase later during condo questionnaire review.
What to do when a project gets flagged
First, find out which finding it is and whether the work is funded, approved, and scheduled. "Ineligible" and "permanently ineligible" are different states, and a completed, documented repair restores the project.
Second, understand what a special assessment does and does not accomplish. If an assessment addresses critical repairs and the underlying issue is not remediated, the project remains ineligible. The money being collected is not the same as the problem being solved. Assessments also carry a second cost: the payment can factor into your debt-to-income calculation, and the balance may travel with the unit. Our guide to special assessment risk before buying covers that side.
Third, price the alternatives honestly. Portfolio and non-warrantable products exist, and lenders who keep loans on their own books can close on projects the agencies will not touch. Expect a higher rate and a larger down payment. Run the deal at that cost of capital rather than the one you assumed, and factor in that your eventual buyer faces the same constraint until the building is repaired.
Fourth, know when the answer is no. A building with several major components at end of life, thin reserves, and a board that has deferred the work repeatedly is not a timing problem. It is a capital call you have not been invited to yet.
What ClearHOA pulls from your documents
Upload the CC&Rs, bylaws, rules and regulations, budget, reserve study, minutes, or HOA addendum, and ClearHOA returns the repair-condition picture in plain English with source citations: deferred repair and structural language in the minutes, components at end of life without a funding plan, special assessment purpose and remaining balance, and any reference to an inspection or engineering report you have not been given. It runs on whatever documents you have, in under 90 seconds, which makes it practical on a shortlist rather than one building at a time.
Frequently asked questions
What are critical repairs on a condo?
Repairs that significantly affect the building's safety, soundness, structural integrity, or habitability. Fannie Mae's examples include mold, water intrusion, damaging leaks, advanced physical deterioration of load-bearing structures, roof and balcony failures, foundation and parking structure problems, and any material deficiency that could contribute to critical element or system failure within one year.
Can you get a mortgage on a condo with deferred maintenance?
Not a conventional agency loan, if the deferred maintenance is significant or the project needs critical repairs. Loans in those projects are not eligible for purchase until the required repairs are completed and documented. Portfolio lenders who hold loans on their own books are the usual alternative, at a higher rate and a larger down payment.
Does a special assessment make a condo non-warrantable?
Not by itself. Associations levy assessments for ordinary reasons. The problem is an assessment tied to critical repairs where the underlying issue has not been remediated, because the project stays ineligible until the work is finished. Read the assessment resolution for its stated purpose, not only its amount.
What is the $10,000 per unit rule?
A project with unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months is ineligible. It is a simple division: total cost of the known unfunded work over the number of units in the project. Repairs already funded through a special assessment are treated separately.
How do I find out if a condo has deferred maintenance before I buy?
Request board minutes for the last 24 months, the current reserve study, the budget, and any special assessment resolution. Read the minutes for repairs discussed and postponed, and the reserve study for components at end of life with no funding plan. If either references an engineering or inspection report, ask for it by name.
ClearHOA pulls the deferred repair language, the components running out of useful life, the assessment purpose, and the missing inspection reports out of any HOA document set in under 90 seconds, each with a citation you can verify. Run it on every condo on your shortlist so the repair-condition flag shows up while you are still deciding whether to write the offer, not after underwriting has already spent your appraisal fee.