If you own, sell, or plan to buy a condo, some big changes to condo financing are underway. Fannie Mae and Freddie Mac are the companies behind most U.S. mortgages, and they set the rules a condo building has to meet before a buyer can get a conventional loan there. Those rules just got stricter in some areas and looser in others.

Here's what's changing, when, and what it means for you.

In short: Fannie Mae and Freddie Mac have changed how condo buildings get approved for conventional loans. For loan applications dated on or after August 3, 2026, lenders can no longer use the quick "limited" building review, so most buildings now get a Full Review. Starting January 4, 2027, Fannie Mae will also require HOAs to budget at least 15% for reserves, up from 10%. These changes may affect HOA dues, sale timelines, and which condos qualify for conventional financing.

The Key Changes in Plain English

• No more "quick" building reviews. Starting with loan applications dated on or after August 3, 2026, lenders can no longer do a shortcut review of a condo building. Most buildings now get a "Full Review," where the lender looks closely at the HOA's budget, reserves, insurance, and overall condition.
• Higher savings expectations for HOAs (coming January 2027). Right now, an HOA's budget needs to set aside at least 10% for long-term repairs and replacements (called "reserves"). For loan applications dated on or after January 4, 2027, that goes up to 15%.
• Reserve studies get a closer look. A reserve study is a professional report that estimates what a building will need to repair or replace over time. If a lender relies on one, the HOA's budget now has to include the highest savings amount the study recommends.
• Good news for small buildings. Buildings with 10 or fewer units may now qualify to skip the building review entirely. Some conditions apply, so check with your lender.
• Good news for investors. Fannie Mae removed its old 50% limit on investor-owned units in established buildings, for investors financing a rental unit.

A rule worth knowing (not new, but important): Buildings with serious unaddressed safety or structural repairs can be labeled "non-warrantable." That means conventional loans aren't available there until the issues are resolved.

What This Means for You

1. Current Condo Owners

• HOA dues may go up. To keep units eligible for conventional loans, many associations will need to boost reserve savings in upcoming budgets. That could mean higher monthly dues.
• Possible special assessments. Buildings behind on major repairs may need to raise money quickly to stay financeable for future buyers.

2. Condo Sellers

• Gather HOA documents early. Before listing, it's smart to request the HOA's budget, financial statements, reserve study, recent meeting minutes, and insurance information.
• Know your building's status. If your building falls short, buyers using conventional loans may have trouble getting approved. Finding this out early gives you time to plan. You might focus on cash buyers, or buyers using FHA, VA, or other loan types that have their own approval rules.

3. Condo Buyers

• Plan for a longer approval process. Full Reviews take more paperwork, so start early and stay in close touch with your lender.
• Some buildings may not qualify. If a building doesn't meet the guidelines, you may need a different type of loan. These often (but not always) come with a larger down payment or higher interest rate.

Your Next Steps

• Sellers: Contact your HOA board or property manager now. Ask for the current budget and reserve study, and ask whether the building currently meets conventional lending guidelines.
• Buyers: Ask your lender to order the HOA questionnaire and documents as early as possible, ideally during your inspection period, not at the last minute.

FREQUENTLY ASKED QUESTIONS (place before Finn's Tip)

What changed with Fannie Mae and Freddie Mac condo rules?
Lenders can no longer use a quick, limited review of a condo building. Most buildings now need a Full Review of the HOA's budget, reserves, insurance, and condition before a buyer can get a conventional loan.

When does the limited condo review end?
For loan applications dated on or after August 3, 2026.

When does the 15% HOA reserve requirement start?
Under Fannie Mae's guidelines, it applies to loan applications dated on or after January 4, 2027. Until then, the requirement is 10%.

Will my HOA dues go up?
Possibly. HOAs that currently set aside less than 15% for reserves may raise dues to keep units eligible for conventional loans.

What does "non-warrantable" mean?
A non-warrantable condo is in a building that doesn't meet Fannie Mae or Freddie Mac guidelines, so conventional loans aren't available there.

Can I still buy a condo in a building that doesn't qualify?
Often, yes. Options may include paying cash, an FHA or VA loan (if the building is approved for those programs), or a specialty loan. Specialty loans often require a larger down payment or a higher rate.

Do small condo buildings still need a review?
Buildings with 10 or fewer units may qualify for a waiver of the building review under Fannie Mae's updated guidelines. Some conditions apply.

What should condo sellers do first?
Ask your HOA or property manager for the current budget, reserve study, meeting minutes, and insurance details, and ask whether the building meets conventional lending guidelines.

🐾 Finn's Tip: "Whether you're buying, selling, or staying put, the secret is the same: sniff around early. Ask your HOA for its documents now, start your loan paperwork early, and remember, good things come to those who sit and stay."

Have questions about how these changes affect your condo or your home search? I'm always happy to talk it through, with no pressure and no obligation.

Source: Fannie Mae Lender Letter LL-2026-03 (March 2026). Guidelines may change. Check with your lender for the most current requirements.

Written by Martha Wilson, Realtor, SRES®,  ABR®, residential real estate agent serving the greater Portland, OR metro area. Last updated: 09/30/2026