Miami’s real estate market continues to thrive. With many luxury condominium projects in development, high-net-worth buyers are attracted to South Florida from around the world. If you’re considering purchasing a pre-construction condo in Miami, you may be wondering, “Should I pay all cash or get a mortgage?”
You may have already narrowed your search down to a couple of new construction condo developments. Or, you might already be under contract. Regardless of where you are in the process, consider exploring your mortgage options to determine if financing is feasible.
In this guide, we answer these key questions about pre-construction condo financing to help inform your decision:
- What will my down payment be?
- Can I get a mortgage to pay the remaining balance?
- When is the right time to apply for a mortgage?
- How do I find a lender that offers mortgages on pre-construction condos?
- What loan programs are available for pre-construction condos?
- What are some real-life success stories of pre-construction condo financing?
For a pre-construction condo in Miami, what will my down payment be?
As a rule of thumb, buyers of pre-construction condos in Miami are required to pay about 30% to 50% of the purchase price, with the balance due at closing.
A pre-construction condo can take at least 2 to 3 years to build. Therefore, the schedule of payments for a pre-construction condo is based on several milestones.
The purchase agreement for a new construction condo usually has a contract clause labeled, “Payment of the Purchase Price.” That clause sets forth the deadlines for payment.
Each building has different requirements, but here is one typical example:
| Percentage of Purchase Price | When Due |
|---|---|
| 20% | Due upon the execution of the purchase agreement |
| 10% | Due within 5 days following notice from the developer that construction has begun (“groundbreaking”) (unless groundbreaking has already occurred at the time of execution of the purchase agreement, if so, then due upon execution) |
| 10% | Due within 5 days following notice from the developer that the building reaches construction of the roof (“topping off”) (unless the topping off has already occurred at the time of execution of the purchase agreement, if so, then due upon execution) |
| Balance | Due at closing (with or without a mortgage) |
Due to the significant nature of the investment, it is important to plan ahead. Determine if you will be funding the entire purchase price on your own, or with the help of a mortgage.
Can I get a mortgage to finance the remaining balance for a pre-construction condo in Miami?
In the example above, the buyer will have paid a total of 40% of the purchase price by the time the building is topped off. The question becomes, “Can the buyer obtain a mortgage to cover the remaining 60% of the purchase price?”
The quick answer is “Yes.”
The buyer needs a loan-to-value (LTV) of at least 60%, which is within the range of LTVs offered by lenders. The typical maximum LTV for a pre-construction condo in Miami can be as high as 75% (or higher on a case-by-case basis).
Therefore, in the example above, assuming the buyer has a strong financial profile, they have the flexibility to choose between:
- A loan amount that will cover the remaining balance and closing costs (including the developer’s fee), meaning the buyer does not have to pay anything further at the closing table; or
- A higher loan amount that not only covers the remaining balance and closing costs, but also helps partially compensate the 40% deposit the buyer previously made.
As discussed later, we helped our client achieve his goal of not having to pay anything at closing. His total deposit over the years was 30% and his mortgage was 75% LTV, allowing him to cover the remaining balance and closing costs, meaning he essentially “netted zero” at closing.
The exact LTV you qualify for will depend on several factors, including your credit score and income documentation. It is important to understand that your loan amount may not be enough to cover the remaining balance at closing.
Therefore, it’s always a good idea to research your mortgage options even if the condo project is still in the early stages of construction.
When is the right time to apply for a mortgage on a pre-construction condo in Miami?
When purchasing an already existing property, the mortgage process is relatively quick and condensed. At the time of signing the purchase contract, the buyer makes a 5% to 10% earnest money deposit, applies for a mortgage, and, about 30 to 45 days later, pays the remaining balance to the seller with their own funds and proceeds from the mortgage.
That is not the case for pre-construction condos. Unlike an existing property, a pre-construction condo is a property you buy before or while it is being built, which can take years. Therefore, the timing of the mortgage application process for new construction condos is more complicated.
Let’s examine the proactive steps you can take regarding a mortgage during each stage of construction:
| Stage | Stage Description | Mortgage-Related Steps to Take |
|---|---|---|
| Pre-Construction | The project has passed a feasibility analysis, and the developer begins marketing the project and offering units for sale. | Too early to apply for a mortgage. Instead, consult with a mortgage professional and research what your LTV may be, to help plan for paying the deposits and anticipate what your remaining balance might be at closing. |
| Construction | Building permits are approved and the developer breaks ground to start construction. | Still too early to apply for a mortgage. Continue to research possible mortgage options and terms. Also, you may have a better sense of when the construction will be completed. As that date approaches, consider asking a mortgage professional for a pre-approval. |
| Certificate of Occupancy | The building is topped off, the Temporary Certificate of Occupancy (TCO) is issued, and closings can begin. | This is the sweet spot to formally apply for a mortgage. Specifically, plan on applying for the mortgage about 45 to 60 days before the anticipated issuance of the TCO. |
Fine-tuning when to start the new construction condo mortgage process
A mortgage loan application package has documents with a relatively short “shelf life.” For example, at the time of closing, the appraisal can’t be older than 90 to 120 days and income and asset documentation can’t be older than 30 days. Therefore, it does not make sense to apply for a mortgage during the pre-construction stage.
Instead, we recommend you research your mortgage options and then wait about 45 to 60 days before the anticipated TCO date to submit your loan application. This ensures you have enough time for the lender to underwrite your file, keep your application documents fresh and timely, and be able to close once the TCO is issued.
That being said, it is still advisable to get started on your mortgage research during the early stages by reaching out to mortgage brokers and potential lenders, to get a general idea of your options for financing your pre-construction condo in Miami.
How do I find a lender that offers mortgages on new construction condos in Miami?
Compared to existing and established condos, finding a lender willing to lend on a pre-construction condo may be more difficult due to the increased risk associated with newly minted condo projects.
Traditional lenders shy away from lending on pre-construction condos due to several factors including:
- Even if the TCO has been issued, the common areas may still be under construction.
- The developer has not turned over control of the condo association to the owners.
- The project has inadequate reserves in its budget for repairs and maintenance.
- Not enough units have sold and closed yet.
In short, pre-construction condos are often “non-warrantable,” meaning they do not satisfy the guidelines of Fannie Mae and Freddie Mac. As such, lenders whose regular practice is to sell their mortgages to Fannie and Freddie will refuse to lend on pre-construction condos.
On the other hand, portfolio lenders, such as local community banks, keep their mortgage loans on their own books instead of selling them on the secondary market, so they can flexibly lend on non-warrantable condos. Non-QM lenders who sell their loans to private investors instead of Fannie and Freddie offer even more creative programs for self-employed borrowers and foreign nationals. These non-QM lenders typically exclusively work wholesale through mortgage brokers.
Sometimes, the developer offers financing, but like most seller-financing options, the terms are usually limited and not favorable.
What condo loan programs are available for pre-construction condos?
Finding a lender to lend on a pre-construction condo is sometimes only half the battle. If something in your own financial profile is challenging, you’ll need to make sure the lender has flexible guidelines for those challenges as well.
Fortunately, all these creative loan programs offered by non-traditional mortgage lenders in the below chart are available for purchasing pre-construction condos:
| Loan Program | Best For | Key Features |
|---|---|---|
| Super Jumbo Loans | Buyers who need a loan amount above $3M | Offers up to 80% LTV up to a $7.5M loan amount (whereas traditional banks often cap at $3M); requires 2 years of tax returns |
| No-Doc Loans (No-Ratio Loans) | Buyers who have high debt-to-income (DTI) ratios | DTI not calculated and no income verification; relies on credit score and reserves |
| Asset-Based Loans | High-net-worth buyers | Uses liquid assets instead of tax returns as qualification |
| Bank Statement Loans | Self-employed or those with fluctuating income | Uses 12-24 months of bank statements instead of tax returns |
| Foreign National Loans | International buyers | Allows non-U.S. citizens to finance properties without U.S. credit history |
| DSCR Loans | Condo investors, including short-term rental properties | Loan approval based on rental income (debt service coverage ratio) instead of personal income |
| Bridge Loans | Buyers in a time crunch and under pressure to meet closing deadline and not lose their deposit | Short-term financial solution to allow borrower time to refinance or sell the property |
Real-life success stories of pre-construction condo financing in South Florida
To help determine if pre-construction condo financing is appropriate for your situation, here are some case studies of how we’ve helped clients get a mortgage to purchase condos in South Florida that were, at the time of closing, pre-construction condos.
| Condominium | Deposits Paid | Problem/Pain Point | Solution |
|---|---|---|---|
| St. Regis Longboat Key | 30% ($8.2M purchase price) | Our client needed a super jumbo loan amount not offered by traditional lenders. | 75% LTV super jumbo loan ($6.15M) from a private bank. The high LTV allowed our client to “net zero” at the closing table. |
| Parque Towers | 20% ($2.65M purchase price) | The developer had yet to turn over control of the condo association to the owners, and the anticipated budget had zero reserves for repairs and maintenance. | 80% LTV jumbo loan from a non-QM lender specializing in non-warrantable condo loans |
| Missoni Baia | 30% ($2.03M purchase price) | At the last minute, a few days before the scheduled closing, the lender denied the loan because the pool and common areas were still under construction. | After the buyer came to us, we connected her with a bridge lender that offered a quick closing at 65% LTV, saving her from losing her 30% deposit and allowing her time to refinance once the common areas were complete |
Key takeaways on getting a mortgage for a new construction condo in Miami
Whether you’re just exploring the idea of investing in a pre-construction condo, or you’ve already gone under contract and paid some of the initial deposits, it’s always wise to explore your options and determine whether your purchase will be all cash or financed with a mortgage.
No matter what stage you’re in, we’re here to help guide you through the process. Contact us today to learn more.
Frequently asked questions – new construction condo financing
Can I finance a pre-construction condo in Miami?
Yes, financing is available for pre-construction condos in Miami. New construction condos typically take at least 2 to 3 years to complete, during which time you’ll pay deposits to the developer from your own pocket as certain milestones are met (totaling about 30% to 50% of the purchase price). When the construction nears completion and the temporary certificate of occupancy (TCO) is about to be issued, you can apply for a mortgage loan to finance the remaining balance.
How much down payment is required for a pre-construction condo in Miami?
Usually, buyers need to make a total down payment of 30% to 50%, payable in stages based on construction milestones (such as groundbreaking and topping off). Buyers typically qualify for loan-to-value ratios up to 75% or more, depending on financial credentials. Therefore, if, for example, your total down payments to the developer are 40% of the purchase price, you can apply for a mortgage at 60% LTV to finance the remaining balance due at closing.
What types of loans are available for Miami pre-construction condos?
Due to the risk, traditional lenders usually shy away from new construction condos because they tend to be non-warrantable condos for not meeting Fannie Mae and Freddie Mac guidelines. However, portfolio lenders and non-QM lenders are willing to lend on these condos. They also offer nontraditional loan programs such as super jumbo loans, no doc loans, asset-based loans, bank statement loans, foreign national loans, DSCR loans and bridge loans.
When is the best time to apply for a mortgage on a pre-construction condo?
Ideally, buyers should apply for a mortgage about 45 to 60 days before the issuance of the Temporary Certificate of Occupancy (TCO). This provides the lender with enough time to underwrite your file, keep your application documents fresh and timely, and enables you to close once the TCO is issued. However, at any stage, it is wise to consult with a mortgage professional or lender to understand your options and general terms you may qualify for.
Are jumbo loans available for Miami new construction condos?
Yes, jumbo loans and super jumbo loans are available for luxury pre-construction condos in South Florida. Jumbo loans start at $806,500 and super jumbo loans start at $3M. For example, some lenders offer up to 80% LTV up to a $7.5M loan amount.
What are the upcoming condo developments in Miami?
Miami’s skyline is constantly evolving, and below are some of the most anticipated developments, with estimated price points and completion dates.
| Development | Location | Starting Price | Estimated Completion | Project Website |
| Cipriani Residences Miami | Brickell | $1.6M+ | 2026 | View Details |
| St. Regis Residences Miami | Brickell | $2.5M+ | 2026 | View Details |
| The Residences at 1428 Brickell | Brickell | $2M+ | 2027 | View Details |
| Bentley Residences Miami | Sunny Isles Beach | $4M+ | 2027 | View Details |
| E11EVEN Residences Beyond | Downtown Miami | $800K+ | 2025 | View Details |
| The Delmore | Surfside | $15M+ | 2029 | View Details |
| 888 Brickell by Dolce & Gabbana | Brickell | $3.5M+ | TBA | View Details |
| Waldorf Astoria Miami | Downtown Miami | $5M+ | 2027 | View Details |
| Mercedes-Benz Places | Brickell | $2M+ | 2027 | View Details |
