Condo Financing Is Changing: What’s New for 2026 and 2027
October 14, 2026
If you’ve worked on a condo transaction lately, you may have felt the ground shifting under condominium financing. Fannie Mae and Freddie Mac have updated their condominium project requirements, changing how condo projects are reviewed and approved for financing. The updates are rolling out in two phases, one that’s already in effect and one arriving in early 2027. Here’s a plain-language look at what’s changing, when, and why it matters.
The headline change: streamlined reviews are retired
For loan applications dated on or after August 3, 2026, Fannie Mae’s Limited Review and Freddie Mac’s Streamlined Review are no longer available. In practice, that means most condo projects now go through a more comprehensive project review rather than the lighter-touch option many transactions relied on in the past.
Reserve requirements are increasing
For applicable condo project reviews, the minimum replacement-reserve allocation is increasing from 10% to 15%. This applies to loan applications dated on or after January 4, 2027. The change is designed to make sure associations are setting aside enough to cover long-term repairs and replacements.
Reserve studies matter more
When a reserve study is used, the project budget must generally account for the highest recommended reserve allocation in that study. The prior “baseline funding” option is no longer permitted for applicable reviews dated on or after August 3, 2026. If an association relies on a reserve study, it’s worth confirming the budget lines up with the study’s recommendations.
Insurance requirements updated
The updates also address insurance in more detail, including master-policy deductibles, HO-6 (unit owner) coverage, and replacement cost coverage. Lenders will be reviewing both master policy and unit policy coverage to confirm the project meets the updated requirements.
Critical repairs and deferred maintenance
Projects carrying significant deferred maintenance or critical repairs may not be eligible for conventional financing. Lenders are evaluating the physical condition of the project along with its financial stability, any litigation, and other project-level risks. Well-maintained projects with clean records will have a smoother path.
Investor ownership rules relaxed
Not every change tightens the rules. Fannie Mae raised the 50% investor concentration limit for established projects reviewed through Full Review, and Freddie Mac raised the 50% owner-occupancy requirement for established projects. Other project eligibility requirements still apply, and new projects continue to have presale requirements.
A break for smaller projects
There’s also some relief for smaller communities. Fannie Mae expanded its Waiver of Project Review for new and established projects with 10 or fewer units, subject to specific conditions. Freddie Mac expanded its exception for review for certain 2 to 4 unit projects, with additional requirements for projects of 5 to 10 units.
The key dates at a glance
A few practical takeaways. More documentation may be needed, since more projects will go through a comprehensive review, so expect requests for additional information and allow for a slightly longer underwriting timeline. Current records make everything easier, so associations that keep budgets, reserve studies, insurance documents, and governing documents current and readily available will help transactions move faster. And keep in mind that marketable is not the same as financeable: a condo can be perfectly marketable and still face financing hurdles, because each lender must review and satisfy all applicable project requirements.
What an HOA may be asked to provide
Before a condo goes under contract, lenders may request documentation such as:
Condo financing has a lot of moving parts right now, and staying current on these requirements is part of how we support the transactions we’re part of. If you have a condo closing on the horizon and want a knowledgeable title partner in your corner, our Ticor Title of Texas team is here and happy to help.
Download the Flyer
For general informational purposes only. This is not legal, tax, or financial advice and is not a substitute for guidance specific to your transaction. Procedures, requirements, costs, and timelines vary by transaction, county, and lender, and are subject to change. This is not a commitment to insure and is not conditioned on the use of any particular company.
The headline change: streamlined reviews are retired
For loan applications dated on or after August 3, 2026, Fannie Mae’s Limited Review and Freddie Mac’s Streamlined Review are no longer available. In practice, that means most condo projects now go through a more comprehensive project review rather than the lighter-touch option many transactions relied on in the past.
Reserve requirements are increasing
For applicable condo project reviews, the minimum replacement-reserve allocation is increasing from 10% to 15%. This applies to loan applications dated on or after January 4, 2027. The change is designed to make sure associations are setting aside enough to cover long-term repairs and replacements.
Reserve studies matter more
When a reserve study is used, the project budget must generally account for the highest recommended reserve allocation in that study. The prior “baseline funding” option is no longer permitted for applicable reviews dated on or after August 3, 2026. If an association relies on a reserve study, it’s worth confirming the budget lines up with the study’s recommendations.
Insurance requirements updated
The updates also address insurance in more detail, including master-policy deductibles, HO-6 (unit owner) coverage, and replacement cost coverage. Lenders will be reviewing both master policy and unit policy coverage to confirm the project meets the updated requirements.
Critical repairs and deferred maintenance
Projects carrying significant deferred maintenance or critical repairs may not be eligible for conventional financing. Lenders are evaluating the physical condition of the project along with its financial stability, any litigation, and other project-level risks. Well-maintained projects with clean records will have a smoother path.
Investor ownership rules relaxed
Not every change tightens the rules. Fannie Mae raised the 50% investor concentration limit for established projects reviewed through Full Review, and Freddie Mac raised the 50% owner-occupancy requirement for established projects. Other project eligibility requirements still apply, and new projects continue to have presale requirements.
A break for smaller projects
There’s also some relief for smaller communities. Fannie Mae expanded its Waiver of Project Review for new and established projects with 10 or fewer units, subject to specific conditions. Freddie Mac expanded its exception for review for certain 2 to 4 unit projects, with additional requirements for projects of 5 to 10 units.
The key dates at a glance
- August 3, 2026: Fannie Mae’s Limited Review and Freddie Mac’s Streamlined Review are retired, and enhanced reserve study requirements take effect.
- January 4, 2027: The minimum replacement-reserve allocation increases from 10% to 15% for applicable condo project reviews.
A few practical takeaways. More documentation may be needed, since more projects will go through a comprehensive review, so expect requests for additional information and allow for a slightly longer underwriting timeline. Current records make everything easier, so associations that keep budgets, reserve studies, insurance documents, and governing documents current and readily available will help transactions move faster. And keep in mind that marketable is not the same as financeable: a condo can be perfectly marketable and still face financing hurdles, because each lender must review and satisfy all applicable project requirements.
What an HOA may be asked to provide
Before a condo goes under contract, lenders may request documentation such as:
- Current HOA budget
- Most recent reserve study
- Current reserve balances
- Master insurance policy
- Insurance deductibles
- HO-6 coverage information
- Recent inspection reports
- Information on critical repairs or deferred maintenance
- Special assessments, current or planned
- Pending litigation
Condo financing has a lot of moving parts right now, and staying current on these requirements is part of how we support the transactions we’re part of. If you have a condo closing on the horizon and want a knowledgeable title partner in your corner, our Ticor Title of Texas team is here and happy to help.
Download the Flyer
For general informational purposes only. This is not legal, tax, or financial advice and is not a substitute for guidance specific to your transaction. Procedures, requirements, costs, and timelines vary by transaction, county, and lender, and are subject to change. This is not a commitment to insure and is not conditioned on the use of any particular company.