The condo pre-sale gate
Banks want 50 to 70% of units under binding contract with deposits before they’ll release construction funds. Debt funds will go as low as 0 to 25%, at a wider spread. Here’s the actual gate.
- Banks typically require 50-70% of units under binding contract with deposits before releasing construction funds.
- Debt funds will lend at 0-25% pre-sale, at a meaningfully wider spread than bank construction paper.
- End-buyer warrantability under Fannie Mae’s 2026 condo rules governs how easily unit buyers can get their own financing, and therefore how fast absorption happens.
- The pre-sale number isn’t a formality, it’s the single input that decides which lender pool is even available.
The gate nobody explains clearly
Every condo developer eventually learns this the hard way if nobody tells them first: the pre-sale percentage isn’t a box to check for the lender’s file, it determines which lenders will even look at the deal, and at what spread.
Why warrantability matters as much as the number
A pre-sale contract is only as good as the buyer’s ability to close on it. Fannie Mae’s 2026 condo project rules govern whether individual units in the building qualify for conventional financing at all, warrantability. A project that fails warrantability review can have a strong pre-sale number on paper and still struggle at closing, because buyers can’t get mortgages.
"The pre-sale number gets the headline. Warrantability decides whether that number survives contact with actual closings."
What this means for financing strategy
If your absorption plan can’t realistically hit bank thresholds early, price the debt fund option into the pro forma from day one rather than treating it as a fallback. The spread is real, but so is the cost of a construction loan that stalls waiting on pre-sales a bank-only structure needed and the market wasn’t giving fast enough.