Miami Beach Condo Prices Rose While Sales Fell. The New Mortgage Rules Help Explain It.

Since Aug. 3, 2026, most conventional loans on units in established Miami Beach condo buildings have needed a full review of the building's finances, unless the project qualifies for a waiver or exemption. Fannie Mae retired its Limited Review process and Freddie Mac retired its Streamlined Review on the same date. For most buildings, lenders now look at reserves, budgets and delinquencies before they fund a loan, so the building's books are part of the approval.

In August 2026, Miami Beach condo and townhome closed sales fell 15% year over year, according to MIAMI Realtors. Over the same month, the city's median condo sale price rose 5%. When fewer units sell and the median still climbs, the units still closing have usually changed. In Miami Beach right now, financing is one of the main things deciding which units those are.

What the Lender Letter Actually Says

Fannie Mae announced the change in Lender Letter LL-2026-03, dated March 18, 2026. The key passage is short:

"We are retiring the Limited Review process. Established projects previously eligible for Limited Review must now be reviewed using the Full Review process or, when applicable, the Waiver of Project Review process."

The rule applies to loan applications dated on or after Aug. 3, 2026. Freddie Mac's Bulletin 2026-C uses the same date, but keys it to when the lender received the application. Fannie's letter also tightened how reserves are judged. If a lender relies on a reserve study, the building's budget has to fund the study's highest recommended allocation. The baseline funding method, which let a reserve balance approach zero, is no longer accepted.

Fannie says the change "effectively retires the remaining geographic restrictions that apply to the state of Florida." Florida buildings no longer face a separate geographic limit. Established buildings that don't qualify for a waiver go through Fannie's Full Review, and their own finances settle the question. Freddie Mac sends established projects through its Established Condominium Project review or Reciprocal Review, unless they qualify as Exempt From Review.

Why a Stricter Loan Review Pushes the Median Up

A full review hits some buildings much harder than others. In a Real Deal follow-up, FirstService Residential regional president Robert Smith said that "communities that consistently invest in reserves, keep financial records current and plan will generally be in a stronger position when lenders evaluate the property." He said financing would be harder for older buildings still working on reserves or major capital projects, and gave roofs, concrete restoration, hurricane windows and elevators as examples.

Price tier matters too. In its October report, The Real Deal cited Analytics Miami MLS data showing that condo sales above $1 million in the first half of 2026 were 143% higher than in the same period of 2019, while sales under $1 million were 27% below 2019 levels. The article added that more affordable stock "is also often in need of repairs or renovations." Older, lower-priced units are where buyers lean on financing most and where building finances are most likely to fail a review. When those sales slow, the units still closing skew newer, better funded and more expensive, and the median goes up.

The August numbers show how much this split depends on how buyers pay:

About half of Miami-Dade condo closings in August were all-cash, and cash buyers never go through a lender's building review. Across South Florida, 60% of million-dollar sales so far in 2026 were all-cash, compared with 42% of all sales, and 86% of sales at $10 million and up were all-cash. Mortgage rates rose to 6.7% in August, and the higher the price, the less those rates and the new review affected who could close.

The Median Leaves Out Most New Condos

There's another reason not to read too much into the Miami Beach median. The MLS totals behind these figures don't include most new construction, pre-construction or condo conversion sales, because those deals are largely not reported in the MLS, according to MIAMI Realtors. So the 5% rise describes resale units only. Within resale, the review treats buildings differently depending on how well they have kept up their reserves and maintenance.

The top of the market shows how little financing matters there. In August, a joint venture led by developer Luis Bosch sold 270 South Hibiscus Drive for $51.5 million, a record for Hibiscus Island at about $5,800 per square foot, The Real Deal reported. The Wall Street Journal reported it was an off-market deal. Through August, Miami-Dade recorded 194 sales at $10 million or more, already 14.1% above the full-year 2025 total of 170. That countywide record pace is happening in the same months as the 15% drop in Miami Beach condo resales.

What a Full Review Looks At

For a financed buyer, the August change turns several building documents into lending questions. Under Fannie Mae's Full Review process, lenders confirm overall project eligibility, including:

• Delinquent association assessments
• Whether the budget is adequate
• Replacement reserve funding, which stays at a 10% minimum until Jan. 4, 2027
• Required project insurance
• Material issues such as significant deferred maintenance or major litigation, which lenders must report

Freddie Mac's established condominium project review covers similar ground: project completion, the current-year budget, reserve-study rules, and delinquent HOA dues or special assessments.

Before the rules took effect, Fort Lauderdale-based AD Mortgage CEO Max Slyusarchuk told CNBC that "it will make the [application] process take much longer and will result in a lot of disqualifying applications." The Real Deal's August 5 report said the changes may slow loan processing and cause some deals to fall through. Federal loan programs offer few alternatives. Only 21 of the 2,397 condominium buildings in Miami-Dade, Broward and Palm Beach counties are approved for FHA loans, according to MIAMI Realtors.

Small buildings get an exception. Fannie Mae expanded its waiver of project review to new and established projects of 10 or fewer units. Freddie Mac now exempts projects of 2 to 10 units. For projects of 5 to 10 units, the building can't be part of a master association, and other conditions apply. In Miami Beach, many older low-rise buildings could fall under that limit, so a building's unit count can decide which review applies.

January 4 Raises the Bar Again

The August change has a second step. For loan applications dated or received on or after Jan. 4, 2027, both agencies raise the minimum replacement reserve under full review from 10% to 15% of the building's annual budgeted assessment income. A building that meets the 10% minimum today may not meet 15% next year unless its budget grows. With the rule keyed to the application date, the timing of a financed purchase this winter matters.

Miami Beach's August numbers show a smaller condo market made up more of buyers paying cash and buildings with strong reserves. The January step makes those same factors even more important.

FAQ

Does the full review apply to cash purchases? No. Fannie Mae and Freddie Mac project reviews apply to conventional loans that lenders plan to sell to those agencies. A cash buyer isn't going through that lender approval, although the building's finances still affect future costs.

Is new construction affected the same way? The Limited Review and Streamlined Review retirements apply to established projects. Most new condo sales also don't appear in the MLS figures discussed above.

This post is general information and not legal, lending or financial advice. Please confirm how these rules apply to a specific building and loan with your lender and the appropriate professionals.

If you're comparing Miami Beach buildings and plan to finance, it helps to know early how a building's reserves and budget compare with what lenders now require. Gina Kirkpatrick can help you gather the association documents your lender will need before you write an offer. Let's Connect.