Buying a Condo? New Financing Rules, August 2026
If you’re thinking about buying a condo, especially for the first time, there’s something important to understand: your lender isn’t only reviewing your finances. They may also review the financial health, insurance, reserves, and condition of the entire condominium community and its homeowners association (HOA). It is important to be prepared beyond where one might have been a mere 6 months ago.
Recent changes from Fannie Mae and Freddie Mac—two major organizations that help support a large portion of the U.S. mortgage market—are changing how condos are reviewed for financing.
Here’s what that could mean for you as a buyer.
Why Condo Associations Receive Extra Review
After the tragic 2021 condominium collapse in Surfside, Florida, lenders began taking a closer look at condo communities. Investigations showed that the building needed major repairs and did not have sufficient reserves to cover them.
As a result, lenders may now review items such as:
The condition and safety of the building
Major repairs that are needed or planned
HOA budgets and financial statements
Reserve funds for future repairs
Structural or engineering reports, when applicable
Insurance coverage
The goal is to make sure a condo community is both physically safe and financially prepared for future expenses.
This is especially important if a condominium is self-managed. Often these HOAs are about saving money on monthly fees (especially during COVID), and unfortunately, the government-backed loans don't consider the concept of sweat equity when evaluating the financial health of an HOA
Condo Financing Reviews Are Changing
Previously, some buyers could qualify for a “limited review,” which required less documentation from the condo association. Fannie Mae and Freddie Mac have now eliminated that option.
This may mean more paperwork and potentially more time for some condo transactions, so it’s especially important to investigate the property’s financing status early.
There is good news, however. Condo communities with 10 units or fewer may qualify for a waiver from a full review, which could simplify financing for buyers in smaller developments.
Another positive change is the removal of the previous guideline limiting investor-owned units to 50% of a condo project. This may make financing available in more communities, although buyers could also face additional competition from investors.
Some Condo Communities May Already Be Approved
Fannie Mae has a system called Condo Project Manager, which allows approved lenders to see whether a condominium project already meets Fannie Mae’s requirements.
Once a project has been reviewed and approved, future transactions may not require the same full review again. That can potentially reduce duplicate paperwork, fees, and delays.
As a Realtor, I can help you work with your lender and HOA to ask the right questions early in the process, especially if you are listing a condo for sale. Here is the Condo Status Finder.
HOA Reserves Matter More Than Ever
One of the biggest changes involves HOA reserve funds—the community’s savings for major future expenses such as roofs, elevators, plumbing, exterior repairs, or other large projects. These are the kind of capital improvements any building might require, and often a reserve study of the complex will point out when these will likely be required.
The reserve requirement is increasing from 10% to 15% of the HOA budget, although an association may also use a reserve study to determine how much should be set aside.
For some communities, building larger reserves could result in higher HOA dues or assessments.
That’s why buyers should look beyond the monthly HOA fee. A low HOA fee may sound attractive, but it’s equally important to understand whether the association has enough money saved for future repairs. Special assessments are a common scenario; be aware of what might be in the horizon.
How I Help My Condo Buyers
Before purchasing a condo, I encourage buyers to look at the bigger picture:
Is the HOA financially healthy? Are major repairs coming? Are adequate reserves available? Will the property qualify for my financing? Which Portfolio or Private Lenders will lend on a condo in that association?
Buying a condo can be a great choice, but understanding the HOA is just as important as understanding the home itself. Is purchasing a condo a good idea for you?
As your Realtor, I’m here to help you ask the right questions, coordinate with your lender, and identify potential concerns before they become surprises.
