Why Condo Mortgage Reviews Are Changing

Fannie Mae and Freddie Mac have traditionally offered streamlined review processes for many condominium projects. These reviews reduced the amount of information lenders needed to evaluate before approving a Conventional mortgage.

Beginning August 3, 2026, those streamlined reviews are generally no longer available for many condo projects, except where specific exemptions apply. As a result, lenders may need to take a closer look at the condominium association and the property as a whole.

The goal is to better assess whether a condo community is financially prepared for major repairs and other long-term expenses.

What Will Lenders Review?

Under the updated approach, lenders may need more detailed information about the condominium association, including:

• Financial statements and operating budgets

• Reserve funds and long-term financial planning

• Master insurance coverage

• Current or planned special assessments

• Owner assessment delinquencies

• Pending or significant litigation

• Major repairs and maintenance

• Structural or mechanical concerns

This creates an important distinction for condo buyers: qualifying for the mortgage yourself is only part of the equation. The condominium project must also meet applicable requirements.

Reserve Requirements Are Becoming More Important

The financial reserves maintained by a condo association are receiving increased attention.

Beginning January 4, 2027, eligible condominium projects will generally need to allocate at least 15% of their annual budget toward reserves for future repairs and replacements, up from the current 10% requirement.

For buyers, this makes it especially important to understand how an association plans and pays for major maintenance. An association with unusually low dues may initially appear attractive, but lower dues can sometimes mean fewer funds are being set aside for future expenses.

Higher reserves may also contribute to increased monthly association dues or special assessments. These costs should be considered when calculating the true affordability of a condo.

How Condo Buyers Can Prepare

If you're considering purchasing a condominium, start reviewing the community before you become too far into the transaction.

Ask for Important Association Documents

Depending on the property and loan requirements, you may want to review documents such as:

• Current budget and financial statements

• Reserve study

• Master insurance information

• Details about special assessments

• Information about owner delinquencies

• Recent inspection or engineering reports

• Information about significant repairs or litigation

Your mortgage professional can help identify which documents may be needed for the loan review.

Start the Process Early

Condo project reviews can take additional time, particularly when an association needs to provide documents or answer lender questions.

Getting the process started early can help reduce the risk of discovering a project-related issue late in the transaction. It also gives you more time to evaluate whether the property is a good fit financially.

What This Means for Condo Sellers

These changes are important for current condo owners as well.

When you eventually sell, the buyer's financing may depend partly on the condominium project's financial and physical condition. A renovated unit can still face challenges if the broader association has insufficient reserves, insurance concerns, significant repairs, or other issues that affect financing eligibility.

If you're planning to sell, consider gathering your association's financial and property documents before listing. Having this information organized can help identify potential issues and make it easier to respond to lender requests during the transaction.

Could These Changes Affect Condo Affordability?

Potentially. If associations need to increase reserves, homeowners could see higher monthly dues or special assessments. Those costs can affect both current owners and future buyers.

For buyers, HOA dues are part of the overall housing expense and may influence how much you qualify to borrow. This makes it important to look beyond the listing price and consider the full monthly cost of ownership.

The Bottom Line for Condo Buyers

The updated condo review requirements make due diligence more important than ever. Buyers should evaluate not only the condition and price of the individual unit, but also the financial health and long-term planning of the condominium community.

A strong borrower profile does not necessarily guarantee that a particular condo project will qualify for Conventional financing. Working with a knowledgeable mortgage professional early in the process can help you understand potential project requirements before making a commitment.

At Premier Plus Lending, our loan officers can help condo buyers understand how the property, association, loan program, and overall financial profile come together during the mortgage process. If you're considering buying a condo in 2026 or beyond, connect with a Premier Plus Lending loan officer for personalized guidance and help navigating your financing options.