If you're shopping for a condo, the financing rules just got stricter.
As of August 3, 2026, Fannie Mae retired its Limited Review process and Freddie Mac retired its comparable Streamlined Review for new applications. For most larger attached condo projects, that means the shortcut is gone and lenders now have to look much more closely at the HOA's finances, reserves, insurance, critical repairs and structural history.
That can make some condo purchases slower, harder and more expensive.
Our honest take: that's probably good for you, even though it's going to be a pain.
The new rules are more likely to uncover underfunded reserves, deferred maintenance, insurance problems and structural issues before you own part of the building instead of after.
As of August 3, 2026, Fannie Mae's Limited Review and Freddie Mac's Streamlined Review are gone for new applications. Most larger attached condo projects now require Full Review unless they qualify for a specific project-review waiver.
The current Fannie reserve-allocation minimum remains 10% of annual assessment income, but it increases to 15% for Full Reviews on applications dated January 4, 2027 or later. Fannie Mae's 2026 project standards update
If a lender relies on a reserve study instead of the standard budget percentage, the old "baseline funding" method is no longer acceptable for applications dated August 3, 2026 or later. The lender has to use the study's highest recommended funding approach.
If a structural or mechanical inspection was completed within the previous three years, the lender may have to obtain and review it. Unresolved critical repairs can make the project ineligible.
Insurance can kill the loan too. Under current Fannie rules, a master-policy deductible generally cannot exceed 5% of the policy's coverage amount per occurrence, and a per-unit deductible cannot exceed $50,000.
A structural or financial problem in another part of the building can affect your financing even when your own unit is perfectly fine, because you own a share of the entire project.
If a building becomes non-warrantable, the buyer pool gets smaller. Specialty financing may still exist, but it often requires more money down and higher pricing.
Read the reserve study, financials, balance sheet, meeting minutes, litigation disclosures and structural reports before you get emotionally attached to the unit.
Here's the important reframe: the documents that now decide whether your lender will finance the condo are largely the same documents a smart buyer should have been reading all along.
Fannie Mae and Freddie Mac announced aligned changes earlier this year, and one of the biggest took effect with applications dated August 3, 2026.
The old shortcut is gone for most larger condo projects.
Under Fannie Mae's old Limited Review, many strong borrowers could qualify for a condo loan without the lender performing the full project review. The lender still had to check certain eligibility items, but the process was much narrower.
That changed.
Fannie Mae now requires projects previously eligible for Limited Review to go through Full Review or, when eligible, a Waiver of Project Review. Freddie Mac made a comparable change by retiring Streamlined Review. Fannie Mae Lender Letter LL-2026-03
There are exceptions. Detached condos, two-to-four-unit projects, and certain attached projects with five to ten units can qualify for a project-review waiver. For five-to-ten-unit attached projects, whether the project is part of a larger master association matters. Fannie Mae's Waiver of Project Review rules
But for the typical attached condo project with more than ten units, assume the lender is going deeper.
This is where two very different numbers get confused.
For a Full Review today, Fannie generally looks for the HOA budget to allocate at least 10% of annual assessment income to replacement reserves.
For applications dated January 4, 2027 or later, that minimum increases to 15%.
That's an annual budget contribution test.
It is not the same thing as saying the HOA needs 10% or 15% of its long-term repair needs sitting in the bank.
We'll come back to that distinction because it matters.
There's also an August 3 change for associations that rely on a reserve study instead of meeting the standard budget percentage. Lenders can no longer use a "baseline funding" recommendation that merely keeps the reserve account from falling below zero. They have to use the highest recommended funding methodology in the study. Freddie Mac describes the same basic change in its current condo guidance. Freddie Mac condo reserve-study guidance
The safety rules themselves did not suddenly appear on August 3.
Fannie Mae has required lenders to investigate critical repairs, significant deferred maintenance and recent structural inspections for several years. If a structural or mechanical inspection was completed within three years of the lender's review, the lender may need the report, and unresolved critical repairs can make the project ineligible. Fannie Mae Full Review requirements
What changed is that far more buyers can no longer use the old Limited Review path to avoid the deeper project review.
A reserve study is a physical and financial analysis of the major common components the HOA is responsible for.
Roofs. Elevators. Plumbing. Paving. Balconies. Exterior systems.
The study estimates how long those components have left, what they'll cost to repair or replace, how much money the association currently has set aside, and how much it should contribute going forward.
That's different from an annual financial audit.
And this is where buyers need to understand two separate measurements.
Fannie and Freddie may look at how much of the HOA's annual assessment income is budgeted toward reserves.
That's the 10% requirement moving to 15% in 2027.
A reserve study may also tell you how well-funded the reserve account is relative to the association's projected long-term needs.
That's a completely different number.
In reserve-study practice, 70% or more funded is generally considered strong, 30% to 70% fair, and below 30% weak. That's not a Fannie Mae qualification standard. It's a way reserve professionals describe the financial strength of the reserve account. Reserve-study funding ranges
Jeb owns in two common-interest developments. One of those associations was once around 80% funded and has fallen closer to 50% as the projected cost of aging components increased.
That's not automatically a bad community. It's a reminder that reserve funding is dynamic.
Costs change. Buildings age. Roofing, plumbing, insurance, labor and construction don't get cheaper because the HOA would prefer to keep dues low.
When reserves fall far enough behind, something eventually has to give.
Usually that means higher dues, deferred maintenance or a special assessment.
And special assessments can be brutal.
The 2021 collapse of Champlain Towers South in Surfside, Florida changed the national conversation around aging condo buildings.
Ninety-eight people died. The National Institute of Standards and Technology's investigation found the collapse involved serious structural failures, and the disaster accelerated scrutiny of aging buildings, deferred maintenance and how associations fund major repairs. NIST's Champlain Towers South findings
Fannie Mae subsequently tightened its critical-repair and deferred-maintenance requirements, which were incorporated into its Selling Guide in 2023.
Florida went much further at the state level.
Many condominium and cooperative buildings that are three habitable stories or taller now require milestone structural inspections, generally beginning when the building reaches 30 years. Local enforcement agencies can require the first inspection at 25 years when local conditions justify it, including environmental conditions such as proximity to salt water. Florida's milestone-inspection statute
Florida also requires Structural Integrity Reserve Studies for many affected buildings and sharply limits the ability of owners to vote away required reserves for structural components.
California went through its own wake-up call after the 2015 Berkeley balcony collapse that killed six people.
SB 326 requires condominium associations to inspect certain exterior elevated elements, generally balconies, decks, stairs and walkways more than six feet above ground whose load-bearing components are supported substantially by wood or wood-based products. The first inspection deadline was January 1, 2025, with inspections required every nine years thereafter.
The larger point is not Florida versus California.
It's that condo buildings are aging, repairs are getting more expensive, and lenders are paying much closer attention to whether associations have the money and planning to deal with those repairs.
Fannie Mae says the most common reasons projects receive an ineligible status include insufficient master-property insurance and critical-repair issues, including failure to meet state or local inspection requirements. Fannie Mae Condo Status Finder
Josh is working one of these files right now.
It's a nice, well-maintained complex. The buyer's unit is on the ground floor and doesn't even have a balcony.
But elsewhere in the project, several balconies need repairs. The association has broken the work into six phases based on urgency, and one of the later phases includes components identified as having zero years of remaining useful life.
That's where financing gets difficult.
Under Fannie Mae's critical-repair rules, the lender has to look at the condition of the project, not simply the unit being purchased.
The buyer's response is understandable:
"But my unit doesn't have a balcony."
That isn't how condominium ownership works.
You don't just own the interior of Unit 104 and pretend the rest of the building belongs to somebody else. You also own an interest in the common property and share financial responsibility for what happens there.
If a balcony needs a major structural repair, the association has to pay for it.
If the garage has a serious structural problem, the association has to pay for it.
If the association gets sued, every owner has an interest in the outcome.
A major problem somewhere else in the development can become your problem even when your unit is perfectly fine.
That's exactly why lenders care.
The HOA's master insurance policy is another place condo financing can fall apart.
Associations have been dealing with sharply higher insurance premiums in many parts of the country, so one way to keep the premium down is to increase the deductible.
But lenders put limits on that.
Under current Fannie Mae rules, the maximum allowable per-occurrence deductible is 5% of the master policy's coverage amount.
If the policy instead has a per-unit deductible, the maximum is $50,000 per unit, and the borrower also needs appropriate individual unit-owner coverage. Fannie Mae master-property insurance requirements
The lesson for buyers is simple:
You can have an 800 credit score, plenty of income and a huge down payment and still have the loan fall apart because the building doesn't qualify.
Even when the building is perfectly healthy, the deeper review costs time and money.
We're seeing limited-document packages that used to cost a couple hundred dollars replaced by much larger HOA document orders that can run hundreds more. Depending on the management company, rush fees can add even more.
More documents also mean more people have to respond.
The lender requests the questionnaire. The HOA or management company has to complete it. Inspection reports may need to be located. Insurance needs to be reviewed. Reserve questions come back. Somebody needs meeting minutes.
That can add time to a closing.
And sometimes you spend the money only to learn the building doesn't qualify.
That's not wasted money.
That's due diligence doing its job.
It's the condo version of paying for a home inspection that uncovers the foundation problem before you own it.
If the project doesn't meet Fannie Mae or Freddie Mac's requirements, the condo may be described as non-warrantable.
That doesn't automatically mean nobody will finance it.
There are specialty and non-QM lenders that make loans on non-warrantable condos, but the terms are different.
Josh and his team regularly see some combination of:
higher interest rates;
larger down payments;
lower maximum loan-to-value ratios;
tighter reserve requirements;
fewer available lenders.
A buyer who planned to put 3% or 5% down may suddenly need 15%, 20% or even more depending on the project and lender.
Fifteen percent may be available at a significant pricing premium. Getting closer to conventional-style pricing on a higher-risk project may require 20% to 30% down.
There is no universal rule because non-warrantable financing is lender-specific.
That's exactly why we want to find the project problem early.
This is also the kind of qualifying and cash-to-close math we work through on a Roadmap call, because the answer changes dramatically when a project falls outside standard agency financing.
Jeb recently heard from a seller in Brooklyn.
She listed her condo around $385,000 and accepted an offer about $15,000 over asking.
Then the buyer pulled the HOA documents.
The building had weak reserves and active litigation.
The deal fell apart.
The seller had no idea either issue existed.
And in fairness to her agent, agents don't automatically have access to a building's internal finances. Unless they've recently sold in that project, reviewed its documents or the seller already knows about the problem, they may discover it at the same time the buyer does.
That's when being non-warrantable starts affecting value.
A building can have beautiful units in a great neighborhood, but if the normal Fannie/Freddie buyer can't finance one of them, the buyer pool shrinks.
Some buyers can't come up with the larger down payment.
Others don't want to pay the higher rate.
Others see the weak reserves, litigation or structural problem and walk away.
The Community Associations Institute surveyed communities that had been deemed ineligible for Fannie or Freddie financing. Among those respondents, 64% said the denial had negatively affected home sales or property values in their community. Community Associations Institute survey results
That doesn't mean every non-warrantable condo immediately loses value.
It means financing eligibility matters to marketability.
The best part of these new rules is that they're forcing buyers to pay attention to information that mattered all along.
A condo is not just a unit.
You're buying into a small financial ecosystem with dozens, hundreds or sometimes thousands of other owners.
Before you write the offer, you want to understand that ecosystem.
Have your agent ask hard questions early. Ask about reserves, current or upcoming special assessments, litigation, insurance problems and any recent structural inspections.
Read the reserve study. Understand what major components are coming due, how much they're expected to cost and whether the association has a credible funding plan.
Read the financial statements and balance sheet. They show the association's current financial condition.
Read the meeting minutes. That's often where you'll find the problem that hasn't made it onto a formal disclosure yet: the roof discussion, the insurance renewal, the proposed assessment or the attorney who's suddenly attending meetings.
Review litigation and structural reports. Those can directly affect financeability.
Use AI to triage the packet. A condo package can run 200 or 300 pages. Use AI to identify the reserve discussion, assessments, litigation, insurance, inspection reports and major upcoming capital projects, then personally read the important sections. Don't use AI as a substitute for legal, financial or professional review.
Expect some due-diligence costs you may not recover. You may pay for documents, appraisal or inspections and then decide to walk away. That's frustrating. It can also be the cheapest money you ever spend.
Think about resale on day one. If the project has problems that could restrict financing, understand what would have to change before the building becomes broadly financeable again.
The reserve study is particularly important, but don't fall into the trap of looking for a mythical 100%-funded association.
Buildings exist to be used.
Roofs age. Elevators wear out. Associations spend reserve money and rebuild the account.
A well-run older community can have a 50% funded reserve position and a credible plan. Another community can look fine today while dues have been artificially suppressed for years and a major assessment is coming.
You're looking for competent management, realistic budgeting and a believable plan, not perfection.
None of this means condos are suddenly bad investments or that you should only buy a single-family home.
Jeb and Josh both own property in common-interest developments.
Condos can still offer a lower purchase price, good locations, amenities and less individual maintenance responsibility. For many buyers, especially first-time buyers, they can be the best way into the market.
The new rules simply make it harder to ignore what's happening behind the front door.
And that's a good thing.
If you want the broader trade-offs, our breakdown of a single-family home versus a condo and our guide to buying a house with an HOA go deeper.
The message hasn't changed:
Read the documents. Understand the finances. Know what you're buying.
Stop guessing what you can really afford
It starts with a Discovery Call, a straight conversation about your real numbers. Josh and his team show you the price range and loan options that fit, and map out every step to closing. They handle your loan directly, never a referral, so you tour with confidence and write offers sellers take seriously.
A non-warrantable condo is a unit in a project that doesn't meet Fannie Mae or Freddie Mac's eligibility requirements for standard agency financing.
Common causes include unresolved critical repairs or significant deferred maintenance, inadequate master insurance, significant litigation, certain single-entity ownership issues and other project characteristics that make the development ineligible.
That does not mean the condo cannot be financed. Specialty and non-QM lenders may still lend on it, usually with different down-payment, reserve and pricing requirements.
If the condo project qualifies for standard financing, low-down-payment conventional programs are still available. The new project-review rules did not eliminate 3% or 5% down condo loans.
The bigger issue is what happens if the project does not qualify.
On a non-warrantable condo, the normal low-down-payment options may disappear. Depending on the lender and the reason the project is non-warrantable, 15% down may work at a pricing premium, while 20% to 30% may produce better options.
There is no universal non-warrantable down-payment rule, so get the project reviewed early.
They measure completely different things.
The Fannie/Freddie reserve-allocation rule looks at how much of the HOA's annual assessment income is budgeted toward replacement reserves. The current Fannie minimum is generally 10% for Full Review, increasing to 15% for applications dated January 4, 2027 or later.
A reserve study's percent funded figure compares the cash already in the reserve account with the amount the study estimates the association should have accumulated based on the age and condition of its common components.
An HOA can therefore contribute 15% of its annual budget to reserves and still be poorly funded overall if it spent years falling behind.
Start with the reserve study, current budget, financial statements, balance sheet and recent board-meeting minutes.
Also look for current or proposed special assessments, litigation, master-insurance information and any structural or mechanical inspection reports.
The financial documents tell you where the HOA stands today. The reserve study and meeting minutes often tell you what's coming next.
If a structural or mechanical inspection was completed within the previous three years, Fannie Mae and Freddie Mac may require the lender to obtain and review the report.
If the report identifies unresolved critical repairs or significant safety, soundness or structural-integrity problems, the project can become ineligible for standard agency financing until those issues are resolved.
That's true even when the problem is nowhere near the unit you're buying.
Co-ops have their own project-eligibility rules, but Fannie Mae also reviews the financial and physical condition of co-op projects.
PUDs are different. They generally follow different project-review rules because the borrower typically owns the home and land rather than buying a condo unit plus a shared interest in the building.
Don't rely on the marketing name. Have your lender confirm how the property is legally classified.
Absolutely, if it's the right unit in a well-run project.
The new rules don't make healthy condo projects bad purchases. They make it harder for serious financial, structural and insurance problems to stay hidden until after closing.
That's protection worth having.