Condo Lending Rules Have Changed

If you’re buying or selling a condominium, there’s an important change to understand: the health of the building itself is playing a bigger role in the financing process.

As of August 3, 2026, Fannie Mae and Freddie Mac retired their streamlined condo review pathways for applicable loans. That means many established condominium projects now face a more comprehensive review when a buyer applies for conventional financing.

The change is national, but its implications are particularly relevant in markets where condominiums make up a significant share of the housing stock, including many communities throughout California.

The building matters more than ever

When you fall in love with a condo, it’s easy to focus on the things you can see: the kitchen, the views, the floor plan, the finishes.

But when it comes to financing, lenders are looking beyond the four walls of the individual unit.

They may need to evaluate the condominium project’s financial health, reserves, insurance, maintenance, repairs and other building-level factors. Freddie Mac’s current guidance, for example, requires lenders to obtain information about inspections, critical repairs and special assessments as part of the project review process.

In other words: when you buy a condo, you’re buying into a building, too.

What changed on August 3?

Previously, certain condominium purchases could qualify for a streamlined or “Limited Review” process, which required less documentation about the overall project.

That pathway is now retired for applicable loan applications dated August 3, 2026 or later. For many established projects, lenders will instead need to complete a more comprehensive review.

That can mean a closer look at items such as:

• HOA reserves and financial statements
• Insurance coverage
• Recent inspections
• Critical or deferred repairs
• Special assessments
• Delinquency rates
• The building’s ownership structure and other project characteristics

The goal is straightforward: to make sure the building itself is financially and physically sound enough to support conventional lending.

Why buyers should pay attention

For buyers, this adds another layer to condo due diligence.

A unit can check every box on your wish list and still present challenges if the underlying building doesn’t meet applicable lending requirements. And because these reviews involve information maintained by the HOA or property manager, issues can sometimes take time to uncover or resolve.

That makes it worthwhile to ask questions early—not just about the unit, but about the building.

Before making a purchase, buyers should understand the HOA’s financial position, reserve funding, insurance, planned capital projects and any current or anticipated special assessments.

This isn’t a reason to avoid condos. It’s a reason to look at the whole property.

Sellers should be paying attention as well

The change matters on the other side of the transaction.

A seller may have a beautifully maintained unit in a desirable building, but the building’s financial or physical condition can influence a buyer’s ability to obtain conventional financing.

That can affect the potential buyer pool, financing timelines and the overall complexity of a sale.

For condo owners considering a move, understanding the building’s current lending profile before coming to market can help identify potential issues early—rather than discovering them after an offer is accepted.

The next date to watch: January 4, 2027

There’s another change on the horizon.

Beginning January 4, 2027, Fannie Mae and Freddie Mac are scheduled to increase the minimum reserve allocation for many condominium associations from 10% to 15% of annual budgeted assessment income. There is an exception when a qualifying reserve study is used and the association follows its highest recommended funding level.

For some associations, meeting the higher threshold could mean adjusting budgets or increasing assessments. It could also bring greater attention to whether a building is adequately preparing for future capital expenses.

What this means for homeowners

The larger takeaway is simple:

The building is part of the home.

Whether you’re already a condo owner, considering a purchase or preparing to sell, it’s worth understanding not only the condition of your unit, but the financial and physical health of the community around it.