Byron Donalds secures administration commitment to change down payment rule on Florida condos

U.S. Rep. Byron Donalds secured commitment from the administration to review a requirement keeping condominium down payments in Florida high.

Already, finance and real estate leaders are saying such a change could have a greater impact on housing affordability, at least in the condo market, than any policy steps taken in recent years.

Donalds, a Naples Republican running for Governor, at a House Financial Services Committee hearing pressed the Department of Housing and Urban Development on a Fannie Mae policy.

Geography-specific selling rules in place since 2008 require anyone buying a condominium in Florida to pay 25% of the value of the home upfront, with loans only able to cover 75% of the costs. For most of the country, buyers only need to pay a 10% down payment, with loans covering up to 90% of the rest of the purchase price.

Donalds said he had received “significant outreach” in Florida over the matter.

“For 17 years, this policy has only applied to Florida and has negatively impacted condominium owners throughout my state,” Donalds said.

Donalds urged the Federal Housing Finance Agency (FHFA) to review the regulation. Housing and Urban Development Secretary Scott Turner committed to doing just that.

“I will make sure that we work very closely with our partners at FHFA to make sure that Florida residents, as it pertains to your issue, are being treated appropriately and fairly in this issue,” Turner said.

Of note, the FHFA right now is headed by Bill Pulte, a Boca Raton private equity firm founder appointed by President Donald Trump to head the agency last year. That agency oversees Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, which collectively provide more than $8.5 trillion in funding for U.S. mortgage markets and financial institutions.

The extra provision on condo purchases in Florida came down in 2008, at the dawn of the Great Recession, when a housing bubble burst and Florida was largely at its epicenter.

Real estate professionals, particularly those in high-rise heavy South Florida, have fought for a change in the rule for years. Danielle Blake, of the Miami Association of Realtors, recently told Mortgage Professional America that the federal agency for years pointed at the real estate owned inventory, or the high number of units in the market owned by banks or government agencies.

“We went back and proved that South Florida’s inventory was in second place compared to Las Vegas at the time,” Blake told the trade publication. “But this law, this provision, the geotargeting, didn’t apply to condos in Nevada.”

While the FHFA has yet to clarify exactly what changes will come, experts praised Donalds for securing a promise from the administration to change the rule.

Sean Stafford, a lobbyist for the Florida Association of Mortgage Professionals, said the burden on buyers has contributed to an affordability crisis in Florida. And he said whatever reasoning drove the creation of the 2008 rule should by now be considered history. If the state once represented a greater system risk to the condo market, that has changed.

He noted that Florida has passed stronger rules regarding the upkeep of condominium buildings, particularly in the wake of the Champlain Towers South condo building collapse in Surfside in 2021. Gov. Ron DeSantis since then has signed multiple laws both requiring upkeep of the laws and providing funding relief for owners and associations.

“Other states are in way worse shape than Florida,” Stafford said. “It’s a silly and outdated rule that just hasn’t been revisited in a long time.”

He said real estates have lobbied federal lawmakers and administrations for years on finding relief and found bipartisan support for reform. “But it wasn’t until Byron Donalds got involved that people got it,” he said.

Donalds represents a large portion of Southwest Florida, including waterfront communities in Lee and Collier counties with a high number of condominium developments. He also has Trump’s endorsement in the race for Governor.