6 Red Flags When Buying a Condo in NH
When you buy a condo in New Hampshire, you’re not just buying a unit. You’re buying into a community. Every owner — whether there are 2 units or 200 — owns a proportionate share of the common land and amenities. That often includes building exteriors, entryways, hallways, and even the roads running through the development. Those roads are private. The town doesn’t plow them, patch them, or pay for them.
Here’s the reality most buyers don’t expect:
A perfectly qualified buyer can still get denied… because the condo association doesn’t meet lending guidelines. Your credit score, your income, your down payment — none of that matters if the community itself fails the lender’s review.
Why This Matters
If a condo doesn’t meet lending guidelines:
- Your financing options shrink
- Your interest rate may increase
- Or your loan may not be approved at all
These are the six red flags to watch for:
1. Choosing the Wrong Type of Financing
Not all condos can be financed the same way. Most buyers want a conventional loan backed by Fannie Mae or Freddie Mac, or a government loan through FHA, VA, or NH Housing. But not every condo qualifies for every loan type. A condo that doesn’t meet conventional guidelines is called non-warrantable — and that limits your options and often raises your rate.
The fix is simple. Have your lender review the project before you fall in love with a unit. [Learn more about warrantable vs. non-warrantable condos here.]
2. Inadequate Budget & Reserves
Lenders look closely at the association’s financial health. A poorly funded reserve account is a red flag — and the bar is getting higher.
Starting in 2027, conventional loan guidelines are expected to require condo associations to allocate at least 15% of their total annual budget toward reserves. Many associations aren’t even hitting the current 10% requirement. FHA and VA haven’t changed their rules but still require that 10% floor.
A thin reserve fund means deferred maintenance, special assessments, and financing problems are likely not far behind. [Learn more about condo reserve funding requirements in NH here.]
Lenders also look at how many unit owners are behind on their condo fees. A high delinquency rate can be a red flag, creating financial stress within the association. If too many owners aren’t paying, it can impact the association’s budget and as a result may limit financing options.
3. Master Insurance Policy Problems
This one catches buyers and Realtors off guard more than almost anything else. The condo association’s master insurance policy must meet Fannie Mae and Freddie Mac guidelines. If it doesn’t, the loan doesn’t close as a conventional loan — period.
Your Lender should ask for the insurance certificate on day one. Mid-deal is too late. [Learn more about condo master insurance requirements here.]
4. Owner-Occupancy Ratio
Lenders track how many units in a building are owner-occupied versus investor-owned. Too many rentals raises the risk profile of the entire project. This can quietly eliminate conventional financing options — sometimes without the buyer ever knowing why.
If a building has a high concentration of short-term rentals or investor-owned units, ask your lender to check the ratio before you go under contract. [Learn more about owner-occupancy requirements here.]
5. Pending Litigation
An active lawsuit against the condo association can make a project non-warrantable overnight. The type of lawsuit matters—but even routine issues can raise concerns depending on severity. The Lender will want to understand what the lawsuit is about — construction defects, slip and falls, neighbor disputes. If it’s significant enough, lenders will walk away.
Always ask the management company directly about pending or recent litigation. It’s a simple question that can save you weeks of wasted time. [Learn more about how litigation affects condo financing here.]
6. Deferred Maintenance
This one became a much bigger deal after the Surfside condominium collapse in Miami in 2021, where 98 people lost their lives. Since then, Fannie Mae created a special addendum to the standard condo questionnaire specifically addressing deferred maintenance and structural integrity.
Lenders now ask directly whether the building has any known structural issues, failed inspections, or deferred repairs. A building with significant deferred maintenance may not qualify for conventional financing until those issues are resolved.
This protects buyers — not just lenders.
[Learn more about deferred maintenance and condo financing here.]
The Condo Questionnaire — How Lenders Check All of This
Most of these issues surface through the condo questionnaire — a document your lender sends to the association or management company as part of the loan process. It covers reserves, insurance, litigation, owner-occupancy, and deferred maintenance all in one place.
Learn more about the condo questionnaire here.
What is a Buyer to Do?
Most condo issues don’t show up on day one. They often show up after you’re under contract. That’s why reviewing the project early matters.
I review condo documents as part of every loan—and I’m always happy to take a look at a specific property before you make an offer. A quick review upfront can save everyone a lot of time.