The $50,000 Deductible Cap on Condos

BOS Agent Training

The $50,000 Deductible Cap: What You Must Check Before You Show or List a Condo

A new Fannie Mae rule can quietly kill a condo deal five weeks in. This is the checklist, the script, and the disclosure judgment call every buyer’s agent and listing agent needs before this rule catches them.

Bottom Line for Agents:

Fannie Mae now caps the per-unit deductible on a Florida condo building’s master insurance policy at $50,000 for all required perils, including wind — mandatory for loan applications dated July 1, 2026 or later. If you don’t confirm this number before an offer is written or a unit is listed, you find out during underwriting, and by then it’s too late to fix cheaply.

What Changed, In Terms You Can Repeat to a Client

Every condo building carries a master insurance policy on the structure — roof, walls, common areas. Like any policy, it has a deductible: what the association pays out of pocket before insurance responds to a claim.

Fannie Mae set a hard ceiling on that number: $50,000 per unit, across all required perils, wind and named storm included. Freddie Mac matched it. Mandatory for any loan application dated July 1, 2026 or later.

For years, plenty of South Florida buildings kept premiums — and HOA fees — down by carrying deductibles well above this level. That trade-off no longer works if the building wants units to qualify for standard 30-year financing. Cross the cap, and the building becomes “non-warrantable.” That word is your client’s money.

If You’re the Buyer’s Agent

Before your buyer falls in love with a unit — and before you draft an offer — confirm the master policy deductible. Over $50,000 per unit means no conventional, FHA, or VA financing in that building. Your buyer’s real options become Non-QM, portfolio, DSCR, or Foreign National loans: typically 25%+ down and a meaningfully higher rate.

The failure mode you’re preventing: inspection paid, appraisal ordered, moving truck half-booked, and week five the lender says the building doesn’t qualify. That’s a blown deal and a bruised client relationship you don’t get back. Checking early costs you one phone call.

If You’re the Listing Agent

Know the deductible before you take the listing, not after your first showing feedback comes back with a financing surprise. If the building is over the cap, your pricing strategy and your buyer pool assumptions change completely — you’re marketing to cash buyers and a thinner Non-QM pool, and that belongs in your CMA conversation with the seller on day one, not discovered mid-transaction.

If the building is over the cap, that’s also a conversation to raise with the seller about pushing their board. Associations across South Florida are renegotiating master policies right now because of this rule — owner pressure is what moves it, and a seller motivated to close may be willing to raise it with the board.

What to Say — Script for Both Sides

To a Buyer, Before You Show a Building

“Before we tour this one, I want to confirm the building’s insurance deductible qualifies for your loan type — there’s a new lending rule that can affect financing on certain buildings, and I’d rather know now than after you’re attached to it.”

To a Seller, Before You Take the Listing

“I want to check your building’s master policy deductible before we set pricing. There’s a rule now that limits which buyers can get standard financing depending on that number, and it changes how we position the listing.”

To a Buyer, If the Building Is Over the Cap

“This building’s deductible is above the new limit, which means conventional, FHA, and VA financing aren’t available here. If you still want to move forward, we’d be looking at Non-QM or portfolio lending, which usually means a bigger down payment and a higher rate. Want me to line up a lender who does those, or would you rather see other buildings first?”

Where to Pull the Number — Fastest to Slowest

Property Management Company

Usually the fastest path. They handle insurance renewals and can confirm the current deductible in minutes. Many also have a recently completed lender questionnaire on file from another unit’s sale.

Association’s Insurance Agent — Certificate of Insurance

The COI for the master policy typically shows the deductible structure, including wind and named storm. The agent who wrote the policy can produce it fast.

Condo Document Package

Some associations include an insurance summary or reference the deductible within the standard financial disclosures sellers must provide buyers in Florida.

Budget Documents & Board Minutes

If your seller owns in the building, they already have these. Deductible levels usually surface at budget time — check the most recent budget approval minutes.

In practice, two calls close this out 90% of the time: the management company and the association’s insurance agent.

What It Means for Your Client’s Options

Factor Building Under the Cap Building Over the Cap
Loan Types Available Conventional, FHA, VA Non-QM, Portfolio, DSCR, Foreign National
Typical Down Payment As low as 3-5% Often 25%+
Interest Rate Standard market rate Meaningfully higher
Your Buyer Pool as Listing Agent Full market of buyers Cash buyers + qualified Non-QM borrowers only

$50,000

Max per-unit deductible allowed

July 1, 2026

Mandatory effective date

All Perils

Including wind/named storm

Agent FAQ

Am I liable if I don’t check the deductible before writing an offer?

Checking the master policy deductible is a due-diligence step, not a guarantee. But if you know a building has financing problems and don’t flag it, or you routinely skip this check, that’s a pattern that exposes you and your brokerage. Please confirm directly with your broker or office administrator before acting.

Do I have to disclose the deductible cap issue to my buyer?

If you know or should know a building’s deductible exceeds the cap and it affects financing, that’s material information relevant to the buyer’s ability to close. Please confirm directly with your broker or office administrator before acting.

What if my seller’s building doesn’t know its own deductible?

More common than you’d think. Push the management company directly for the Certificate of Insurance, or request a recently completed lender questionnaire from another unit’s sale in the building. Don’t list the unit as warrantable without confirming.

When in the transaction should this be checked?

Before an offer is written on the buy side, and before a unit is listed on the sell side — not during underwriting. Finding out at week five, after inspection and appraisal, is the version that costs deals and deposits.

Does this affect the buyer’s HO-6 policy too?

Yes — worth flagging to your buyer. If the master policy carries a per-unit deductible, unit owners are expected to maintain an HO-6 covering at least that deductible or the cost to restore the unit’s interior, whichever is greater. Point them to their insurance agent to confirm.

This training reflects lending rules as issued and is for internal agent education. Lender guidelines and effective dates can be updated — always confirm current deductible requirements with the lender and the association’s insurance agent, and confirm disclosure obligations directly with your broker or office administrator before acting on a specific transaction.

Joaquin Gutierrez

Florida Licensed Real Estate Broker — BK0625118 · Founder, BOS & AOS

Serving Miami-Dade, Broward & Palm Beach Counties