New Condo Lending Rules Are Here — What Buyers and Homeowners Need to Know

If you own a condo, are buying one, or are thinking about it, new guidelines from Fannie Mae and Freddie Mac are about to change how your building qualifies for mortgage financing. Some of the changes expand who can get a loan — others could make it harder. Here is a plain-language breakdown of what is changing and what it means for you.

What is this all about?

Fannie Mae and Freddie Mac back the majority of home loans in the U.S. When they update their rules for condominium projects, lenders follow. Bulletin 2026-C introduces changes across two main areas: how condo projects are reviewed and approved for lending, and how insurance requirements work. Some changes take effect immediately; others kick in later in 2026 or early 2027.

Project review changes

[Expanded eligibility]  Small buildings (10 units or fewer) now easier to qualify    Effective immediately

Previously, lenders could skip the full project review process only for detached homes and small 2–4 unit properties. Now, condo buildings with 10 or fewer units can also qualify for an exemption — as long as the building is not part of a master association, has no hotel-style activity, and has no outstanding financial or safety concerns.

[Expanded eligibility]  Florida new construction: mandatory PERS review removed    Effective immediately

New and recently converted condo projects in Florida previously had to go through a formal pre-sale approval process (called PERS) with Fannie Mae. That mandatory requirement has been lifted — potentially speeding up the path to financing for new construction buyers in the state.

[Expanded eligibility]  Investor ownership restrictions eliminated    Effective immediately

Until now, buildings needed at least 50% of units occupied by owners or second-home buyers for investor loans to qualify. That threshold has been removed entirely for established condo projects — good news for investors and may help buildings with high rental concentrations.

[Important warning]  Streamlined review eliminated — all projects need full review    August 3, 2026

This is the biggest change. Currently, 40–65% of condo loans go through a faster 'limited review' process. That option is being eliminated. Starting August 3, 2026, all established condo projects must go through a full review or qualify for an exemption. Expect longer processing times and more documentation.

Reserve fund changes

Reserves are the funds a condo association sets aside for future repairs — things like roof replacements, elevator work, or structural repairs. Lenders care about this because underfunded buildings are a financial risk. Two significant changes are coming.

[Review warning]  Reserve studies must use the highest funding amount    August 3, 2026

Going forward, lenders must use the highest recommended reserve funding amount from the study. The most lenient calculation method (the baseline method) can no longer be used, even if it is the only one provided. Buildings relying on lower estimates may find their reserves considered insufficient.

[Important warning]  Minimum reserve contribution rises from 10% to 15%    January 4, 2027

Condo associations must now set aside at least 15% of annual assessment income into reserves (up from 10%). For many buildings, this will require a vote among unit owners to increase HOA dues or reallocate funds. If your building is not already at 15%, start that conversation with your HOA board now.

Insurance requirement changes

The bulletin also updates master property insurance standards for condos, PUDs, and cooperatives — mostly in ways that help buildings currently shut out of lending.

[Expanded eligibility]  More ways to prove adequate insurance coverage    Effective immediately

Lenders can now accept Guaranteed Replacement Cost (GRC) and Extended Replacement Cost (ERC) estimates to prove coverage sufficiency. Buildings previously flagged as ineligible due to this issue are being returned to eligibility.

[Expanded eligibility]  Inflation guard and replacement cost requirements relaxed    Effective immediately

Inflation guard coverage is no longer required on master policies, and roofs can now be insured on an actual cash value basis rather than full replacement cost. These changes will restore lending eligibility to buildings previously blocked due to these specific coverage gaps.

[Review warning]  Per-unit deductible cap of $50,000 introduced    Effective immediately

A new hard cap means per-unit deductibles for any peril may not exceed $50,000. This new flat limit could make it harder for some high-value or high-risk properties to find compliant insurance coverage.

What should you do now?

If you are buying a condo, talk to your lender about whether the project has been reviewed and whether it will need a full review under the new rules — especially for loans applied for after August 3, 2026. Build extra time into your timeline.

If you own a condo, check in with your HOA board about your building's reserve fund level and whether it will meet the new 15% threshold by January 2027. Raising dues or reallocating the budget may require an owner vote, so the sooner those conversations start, the better.

If you are in Florida or are an investor, the changes removing mandatory PERS review and the 50% owner-occupancy threshold are good news — more projects and loan types should now be eligible for financing.