Palm Springs Condo: The Buyer Was Approved, the Building Wasn’t (Yet). What HOA Approval Really Takes in 2026

I’m Michael DiVita (DRE #01372066 | NMLS #241655), DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. When the bank says no, I find a way. Call (800) 239-1103. In escrow, October 2026.

The short answer: on a condo purchase, the buyer getting approved is only half the deal. The lender also has to approve the building, and that’s where my current Palm Springs file got hard. We sent the lender an 8-page condo questionnaire, the HOA’s master insurance policy, the budget with a reserve study and a 2024 SB 326 balcony inspection report. The lender came back with questions on all of it, and wanted proof that the repairs in the SB 326 report were actually done. Condo approvals are getting harder, and they’ll get harder again in January 2027 when Fannie Mae raises its reserve requirement.

Where This Deal Stands

I’m in contract on a condo purchase in Palm Springs right now. The loan is approved, the appraisal is in, and every condition is signed off except one: the HOA. The holdup isn’t the buyer. It’s the building.

That’s also why, on a condo, you never sign off on the loan contingency until the lender has signed off on the HOA. The buyer can be fully approved and the deal can still fall apart over the building.

Since Fannie Mae and Freddie Mac retired the quick “limited review” in August 2026, almost every condo building with more than 10 units gets a full review. The lender has to look at the whole HOA: its finances, its insurance, its repairs and any litigation. Here’s what we provided:

• An 8-page condo questionnaire filled out by the HOA’s management company
• The HOA master insurance policy
• The budget, with a reserve study
• The SB 326 inspection report, done in 2024

The Management Company Problem

You don’t get these documents from the HOA board. You request them from the management company the HOA hires, and in my experience they’re all difficult and expensive. Slow responses, documents that answer half the question, and a fee for every request. On this file, the documents alone cost close to $700. When the lender came back with questions about the insurance, the questionnaire and the SB 326 report, every answer had to go back through that same company.

“The Repairs Were Done.” The Lender Wants Proof.

California’s SB 326 requires condo HOAs to have an engineer or architect inspect balconies, decks, walkways and stairways, and repairs in the report have to be addressed. Under Fannie Mae’s rules, a building with unfinished critical repairs isn’t eligible. So when the lender saw the 2024 report, it wanted to know the repairs were finished.

The management company verbally confirmed that all the repairs were done. That wasn’t enough. The lender wanted further verification in writing.

So I called the company that did the SB 326 inspection. They don’t do a final inspection unless the HOA requests it and pays for it, at a cost of more than $3,000. Mid-escrow, that wasn’t an option.

Finally I got someone at the actual HOA on the phone, and they’re hunting down the invoices for the work that was done three years ago. That’s what it takes sometimes.

The Takeaway: Condos Are Hard to Get Done

This building isn’t unusual. Plenty of California condo buildings did their SB 326 inspection, did the repairs and never kept a clean paper trail. When a buyer’s lender asks for proof, nobody can find it quickly.

And it’s about to get tougher. Starting January 4, 2027, Fannie Mae will require an HOA’s budget to put at least 15% of its annual assessment income into reserves on full reviews, up from 10% today. An HOA under that line can still qualify with a current reserve study, but only if the budget funds the study’s highest recommended amount. HOAs that don’t get ahead of it will see more buildings become non-warrantable, which means buyers there can’t use a standard conventional loan.

What I Tell Condo Buyers Now

• Ask for the HOA documents when you make your offer, not after you’re approved: budget, reserve study, master insurance, the SB 326 report and recent board minutes.
• If the SB 326 report lists repairs, ask for proof they’re finished: paid invoices, a contractor’s completion letter, permits signed off, or the engineer’s follow-up letter.
• Find a real person at the HOA early, like a board member or treasurer, in case the management company stalls.
• Don’t remove your loan contingency until the HOA is signed off, even if the loan and appraisal are done.
• Budget for the documents. Management companies charge for each item; on this file it was close to $700.
• Build extra time into escrow for the building review.
• Check the reserves against the 2027 rule. A building that just squeaks by at 10% today may not pass next year, which matters when you sell or refinance.
• Have a Plan B. If the building can’t pass a full review, a non-warrantable condo loan can often still close, usually with a higher rate and a bigger down payment.

About this case study: this is my own file, currently in escrow. Details are from the actual transaction; the buyer, building and HOA aren’t named for privacy. Lender and HOA requirements vary, so treat this as an example, not a guarantee.

Frequently Asked Questions

Related Resources

• Fannie Mae’s August 2026 Condo Rule Change
• SB 326 and California Condo Mortgages
• Non-Warrantable Condo Mortgages in California
• HOA Special Assessments in California
• Palm Springs Leased Land Mortgages

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