Important Condo Financing Changes for 2026–2027

If you own or are preparing to sell a condominium, new Fannie Mae condominium-project guidelines may make HOA documents and project financial health more important than ever.

Effective for many loan applications dated on or after August 3, 2026, the streamlined Limited Review option has been retired for established condo projects with more than 10 units. That means more conventional buyers may need a more detailed Full Review of the HOA and project before their loan can be approved. 

What is changing?

Limited Review is being eliminated

Previously, some condo buyers could qualify through a more streamlined review process. Now, for eligible established condominium projects with more than 10 units, lenders generally need to perform a Full Review.

That review can include the HOA’s:

• Budget and reserve funding

• Master insurance coverage

• Delinquent HOA assessments

• Pending litigation

• Special assessments

• Deferred maintenance and major repair needs

• Project condition and required inspection reports

In short, the financial and operational condition of the HOA can have a more direct effect on a buyer’s financing timeline and loan approval. 

Reserve requirements increase in 2027

Beginning with loan applications dated on or after January 4, 2027, the minimum annual replacement-reserve allocation increases from 10% to 15% of the HOA’s annual budgeted assessment income.

There is a potential alternative: an HOA may rely on a reserve study completed or updated within the prior three years, provided the budget follows the study’s highest recommended funding level.

For sellers, this is a reason to request the HOA’s current budget and reserve study early, well before an offer is accepted if possible.

Insurance review is evolving

Insurance remains a major part of the condo review. Lenders may need to evaluate master-policy coverage, deductibles, fidelity/crime coverage where applicable, carrier information, and whether the HOA has experienced coverage limitations, major premium increases, or nonrenewal concerns.

Some updates may offer flexibility, but others can require additional documentation. The practical takeaway: obtain the HOA insurance declaration and current insurance summary early, rather than waiting until the buyer’s lender asks for it.

Investor concentration limit is removed

The prior 50% investor-concentration limit is being eliminated. This can be helpful for communities with a high number of non-owner-occupied units, although the overall project must still meet applicable review standards.

A project’s financial condition, insurance, delinquency rate, maintenance needs, and other eligibility factors can still affect financing.

Smaller projects may have a simpler path

Eligible condominium projects with 10 units or fewer may no longer require a full project review. This can reduce paperwork and potentially simplify financing for some small condominium communities.

Eligibility still depends on the specific loan, lender, borrower, and project facts, so buyers and sellers should confirm the applicable review path with the buyer’s lender early in escrow.

What sellers should do now

If you are considering selling a condo, prepare your HOA information before going on the market:

• Request the current HOA budget and reserve study.

• Obtain the HOA resale disclosure package as early as appropriate.

• Request the master insurance declaration, insurance summary, and deductible information.

• Ask about pending or proposed special assessments, major repairs, litigation, rule changes, and dues increases.

• Obtain recent HOA meeting minutes.

• Confirm whether the HOA has current information on delinquency rates, reserve funding, and project maintenance.

• Give the buyer’s lender and escrow team sufficient time for the project review.

Why early preparation matters

A well-prepared HOA package can help reduce last-minute underwriting surprises, avoid unnecessary escrow extensions, and make your listing more attractive to conventional buyers.

The earlier we identify potential HOA, reserve, insurance, or maintenance concerns, the more options we have to address them before they affect pricing, negotiations, or financing.