Buying a Condo in California: HOA Documents, Loan Approval and Insurance

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Buying a condo in California works like buying a house, with three extra layers: you’re also buying into a homeowners association governed by the Davis-Stirling Act, your lender has to accept the whole project and not just your unit, and insurance is split between the association’s master policy and your own unit policy. Read the HOA disclosure package during your contingency period, confirm early that the project qualifies for your loan type, and line up an HO-6-style policy that fills the gaps in the master policy.

Step 1: The HOA disclosure package

California sellers of a condo must give buyers a defined set of association documents under the Davis-Stirling Common Interest Development Act, including the CC&Rs and bylaws, the annual budget report and reserve disclosures, a statement of assessments, and other items listed in Civil Code 4525. We walk through that list item by item in our HOA documents guide.

For a condo buyer, three parts of that package deserve particular attention:

• The annual budget report. It must include a summary of the association’s property, general liability, earthquake, flood and fidelity insurance, with the insurer, coverage type, limits and deductibles. For a condominium project, it must also include a separate statement of whether the project is FHA-approved and VA-approved (Civil Code 5300).
• Reserves. The reserve study and the Assessment and Reserve Funding Disclosure Summary show whether reserves are on track and whether special assessments are expected. Our HOA documents guide explains how to read them.
• The balcony inspection report. Covered below.

Your purchase agreement sets the review period, so know that date before you start reading.

Buying a new condo from a developer

For a new project, the Department of Real Estate issues a public report. The seller must give you a copy of it before you sign a binding contract, and get your receipt (Business and Professions Code 11018.1). Read it alongside the HOA budget, because a new association’s first-year budget is set by the developer.

Step 2: Make sure the project qualifies for your loan

With most condo loans, the lender reviews the project as well as the borrower. A project that doesn’t meet a loan program’s standards can stop a deal even when your credit and down payment are fine.

FHA

FHA insures loans on condo units in FHA-approved projects, or in projects that meet its Single-Unit Approval (SUA) requirements (HUD, Condominium Mortgage Insurance). Per HUD, SUA is available only when the project is not FHA-approved, is complete and ready for occupancy, has at least five units, and isn’t a manufactured home project; the project must also meet a subset of the approval standards, including FHA concentration, owner-occupancy and financial condition. Look up a project’s status on HUD’s FHA-approved condominium search, which shows approved, expired, rejected and withdrawn projects. Thresholds are in HUD’s Single Family Housing Policy Handbook 4000.1; your lender applies them.

VA

VA-backed purchase loans can be used to buy a condo in a VA-approved project (VA, Purchase Loan). VA publishes a condo report on its Loan Guaranty site; ask your VA lender to confirm the project’s status early in escrow. See our VA home loans guide.

Conventional: "warrantable" vs. "non-warrantable"

"Warrantable" is industry shorthand for a condo project that meets Fannie Mae or Freddie Mac eligibility rules, so a conventional loan on it can be sold to them. Fannie Mae’s Selling Guide doesn’t use the word; it sets out project review methods (Selling Guide B4-2.1-01) and a list of ineligible project characteristics (B4-2.1-03). Some highlights from the Selling Guide:

A project that fails these tests is "non-warrantable." Financing may still be available through portfolio or non-agency lenders, usually on different terms. If the HOA package mentions litigation, a large special assessment, a failed balcony inspection or heavy investor ownership, raise it with your lender before you remove your loan contingency.

Step 3: Master policy and your HO-6

The association’s master policy covers what the CC&Rs make the association responsible for. Your own unit owner’s policy (commonly called an HO-6) covers what’s left: often interior finishes, improvements, your belongings, liability and loss assessments.

Fannie Mae requires a borrower to carry a unit owner’s policy when any part of the unit’s interior or improvements isn’t covered by the master policy, or when the master policy has a per-unit deductible. The coverage must be at least enough to restore the uncovered interior to its pre-loss condition, or the per-unit deductible if that’s greater, on a replacement-cost basis, with a maximum deductible of 5% of coverage or $2,500, whichever is greater (Selling Guide B7-3-04). FHA and VA lenders have their own rules.

Practical steps:

1. Get the master policy declarations and the budget report’s insurance summary from the HOA package.
2. Read the CC&Rs to see where the association’s responsibility stops: bare walls, original fixtures or everything inside.
3. Note the master deductibles. Some CC&Rs pass them to owners after a loss.
4. Ask your agent about loss assessment coverage and, separately, earthquake coverage; the budget report’s insurance summary shows whether the association carries any.
5. Bind coverage before closing; see homeowners insurance during escrow.

Step 4: SB 326 balcony inspections

California’s SB 326 rules require condominium associations to have a licensed structural or civil engineer or architect inspect a random, statistically significant sample of exterior elevated elements: balconies, decks, stairways, walkways and railings more than six feet above ground that are supported wholly or substantially by wood or wood-based products (Civil Code 5551). The first inspection was due by January 1, 2025, and inspections repeat at least every nine years, coordinated with the reserve study. For buildings permitted on or after January 1, 2020, the first inspection is due within six years after the certificate of occupancy. If the inspector finds an immediate threat to safety, the report goes to the local code enforcement agency, and the association must restrict access until repairs are approved.

The most recent report is part of the Civil Code 4525 disclosure package. Check its date, the number of elements inspected and any repair recommendations, and match those against reserves and the special assessment disclosures. Apartment buildings fall under a separate law, SB 721; see SB 721 balcony inspections if you’re comparing a condo with a small rental building.

Condos in the counties we serve

Condo stock and rules vary by market. Browse current options by area: San Francisco condos, Marin County condos, Santa Rosa condos and Napa condos.

In San Francisco, ownership as a tenancy in common does not create a right to convert the building into condominiums. San Francisco Public Works processes condominium conversions and publishes separate applications for two-unit residential conversions and the Expedited Conversion Program. Its current application list labels ECP Group 7 suspended. Eligibility depends on the actual building, ownership and occupancy history, and applicable tenant protections. Confirm the available process with Public Works before valuing a TIC share on the assumption that it will become a condo. Compare the ownership arrangements in our San Francisco TIC guide.

Questions people ask

What documents should I get when buying a condo in California?

The seller must provide the Civil Code 4525 package: governing documents, the budget report and reserve disclosures, an assessment statement, violation and defect notices, rental restrictions, the balcony inspection report and, if you ask, a year of board minutes.

How do I know if a condo is FHA-approved?

Search HUD’s FHA-approved condominium list by name, city or ZIP code. The HOA’s budget report must also state the project’s FHA and VA approval status. If it isn’t approved, ask your lender whether Single-Unit Approval is possible.

Can I use a VA loan to buy a condo?

Yes, in a VA-approved project. Ask your VA lender to check VA’s condo report early, because approval is project-wide.

What does "non-warrantable condo" mean?

It’s industry shorthand for a project that doesn’t meet Fannie Mae or Freddie Mac eligibility rules, for example because of pending HOA litigation, high commercial space, concentrated ownership or critical repairs. Financing may still be possible through other lenders.

Do I need an HO-6 policy if the HOA has insurance?

Usually. Fannie Mae requires a unit owner’s policy when the master policy doesn’t cover the unit’s interior or improvements, or carries a per-unit deductible. Your lender will tell you its requirement.

What is the SB 326 balcony inspection?

Civil Code 5551 requires condo associations to have exterior elevated elements, such as wood-supported balconies and stairways, inspected by an engineer or architect at least every nine years. The latest report is part of the seller’s disclosure package.

Is buying a new condo different from buying a resale condo?

Yes. For a new project, the seller must give you the DRE public report before you sign. The first budget is set by the developer, so compare it with similar established buildings.

Sources & notes

1. California Civil Code 4525, 5300 and 5551
2. Business and Professions Code 11018.1 (DRE public report)
3. HUD, Condominium Mortgage Insurance and FHA-approved condominium search
4. VA, Purchase Loan and VA Loan Guaranty condo report
5. Fannie Mae Selling Guide B4-2.1-01, B4-2.1-03 and B7-3-04
6. San Francisco Planning, Condominium Conversion Restrictions

Statute text was read on a public mirror of the official code; links go to leginfo.legislature.ca.gov. FHA owner-occupancy and concentration thresholds weren’t stated on the HUD page reviewed, so none are given here; your lender applies HUD Handbook 4000.1. VA’s condo report page loads as an interactive tool, so its contents weren’t summarized. Freddie Mac’s project standards weren’t reviewed. Fannie Mae’s guide changes periodically; check the current version.

General information, not legal, tax or lending advice. Updated November 2026. Primary sources are linked in this guide.

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