Your finances, your unit and the project are separate checks
A condo loan evaluates the borrower, the unit and applicable project requirements. A good credit score, substantial equity or strong appraisal does not automatically resolve an association problem. Project review can consider budgets, reserves, insurance, litigation, assessments, physical condition and other program criteria. The lender identifies the applicable path for the property and transaction.
This guide addresses selected Fannie Mae and Freddie Mac changes and practical preparation. FHA, VA, private DSCR and portfolio programs have their own requirements. State inspection or reserve laws are separate from mortgage-investor rules. Do not assume a conventional project-review waiver waives every property or insurance condition.
Changes already in effect in 2026
Fannie Mae retired Limited Review for applications dated on or after August 3, 2026. Its paths include Full Review or an applicable project-review waiver. It also changed reserve-study treatment when that flexibility is used. Source: Fannie Mae LL-2026-03.
Freddie Mac retired Streamlined Review for applications received on or after August 3, 2026. Its March bulletin also broadened eligible small-project exemptions and removed the established-project 50% owner-occupancy condition for investor loans. Those changes do not remove all remaining project requirements. Source: Freddie Mac 2026-C.
The 15% reserve change is scheduled for January 2027
Fannie Mae’s letter raises the minimum replacement-reserve allocation for Full Review from 10% to 15% of annual budgeted assessment income for applications dated on or after January 4, 2027. This concerns an annual budget allocation, not a claim that an association’s bank balance must simply equal 15% of property values or that every owner pays 15% more dues.
Budget arithmetic, not an automatic dues forecast
If annual assessment income is $240,000, 10% is $24,000 and 15% is $36,000: a $12,000 allocation difference. How the association funds an adequate budget depends on its actual expenses, reserve study and choices. This example does not predict a mandatory increase for any particular owner.
Ask the lender whether the percentage approach or an eligible reserve-study path applies, and obtain the association’s proposed 2027 budget. Do not assume a dated project review overrides rules effective for a later application.
Small buildings and investor-heavy projects
A small-project waiver or exemption is conditional. Freddie Mac’s expanded path covers eligible projects with two to ten units; five-to-ten-unit projects cannot be part of a master association for that option and must meet the specified requirements. New and established projects can be treated differently in other areas. Ask for the exact route rather than deciding eligibility from unit count alone.
The owner-occupancy change for established projects should not be confused with rules for new-project presales, short-term rental activity, a single entity owning multiple units or other project characteristics. Investor concentration is one issue, not the whole review.
Insurance and assessments: get the actual documents
Request the master policy and relevant endorsements, not just a one-line certificate. Ask the lender to review coverage, deductibles and any needed unit-owner HO-6 policy. Updated insurance provisions do not mean every policy now qualifies. The association’s and your unit’s coverage must work together.
For special assessments, ask what work is funded, whether it is complete, how much remains, the payment schedule and whether there are delinquencies or additional anticipated charges. A paid assessment does not by itself prove that underlying critical repairs are complete. Obtain engineering or inspection records when applicable.
Condo document checklist before you commit
- Current association budget, financial information and proposed next-year budget.
- Reserve study and evidence of the allocation actually adopted.
- Completed lender questionnaire and association contact details.
- Master insurance, endorsements and unit-owner coverage requested by the lender.
- Special-assessment notices, purpose, collection status and work-completion information.
- Relevant inspection/engineering reports, repair records and evacuation notices if any.
- Pending litigation details and applicable governing documents.
- Rental restrictions, unit count and master-association information.
The lender may require more or fewer items under its chosen review. Ask who obtains them, fees charged by management and expected timing. Association records often take longer than the borrower’s own documents; request them early.
Two practical scenarios
| Situation | What to resolve |
|---|---|
| You qualify personally, but the association budget is thin. | Have the lender review the applicable reserve method and budget before relying on a closing date. Additional down payment does not automatically cure the project issue. |
| You want cash-out on an investor condo with good rent. | Confirm condo eligibility, permitted rental use, HOA dues in the payment, accepted rent, value and cash-out leverage together. Strong rent cannot substitute for required insurance or project review. |
A condominium appraisal and project review answer different questions. Read the UAD 3.6 appraisal update and the mortgage credit-score guide to understand the other parts of the file.
DSCR and non-warrantable alternatives
“Non-warrantable” generally means a condo does not fit the applicable agency eligibility path; identify the specific reason rather than treating it as a single property type. Selected private or portfolio lenders may consider certain issues with different leverage and pricing. They still review risk, and not every safety, legal or insurance concern is financeable.
Review non-warrantable condo financing for program alternatives. For a non-owner-occupied rental, use the DSCR cash-out cornerstone guide and the STR DSCR guide. Condo-hotel use and ordinary rental use are not automatically treated alike.
Start with the building facts
Send the property, occupancy, unit count, association contact, known assessment/repair issues and financing goal through Tell Us About Your Deal. Ask which review path applies and which facts remain unresolved. An initial scenario review is not project approval or a commitment to lend.
Frequently asked questions
Is the 15% reserve rule already universal in October 2026?
No. The cited increase is scheduled for January 4, 2027 applications under the applicable review, and programs differ.
Does good credit guarantee condo financing?
No. Borrower, unit and project eligibility are separate checks.
Are all buildings with ten or fewer units exempt?
No. The applicable waiver or exemption has conditions; verify the project’s route.
Can a private lender consider a non-warrantable condo?
Some can consider selected issues, but eligibility and terms vary and not every concern can be resolved with financing.
Check the numbers for your rental
Share the address, purchase date and price, rent, estimated value, payoff and target cash. LoanFight can help identify the lender questions that matter before a full application.
Tell Us About Your Deal →Sources and review date
- Fannie Mae LL-2026-03, March 18, 2026
- Freddie Mac Bulletin 2026-C, March 18, 2026
- Freddie Mac condo FAQs
Reviewed October 1, 2026. Confirm current policy and lender requirements for your transaction. LoanFight is not a direct lender and does not set final terms.