Homebuyers

What the New Fannie Mae and Freddie Mac Rules Mean for Condo Buyers in 2026 and Beyond

Buying a condo could be a little more challenging. Going forward, many buyers will now have to take a closer look beyond the walls of the unit itself.

Earlier this month, Fannie Mae and Freddie Mac officially ended their streamlined review process for most condominium mortgage applications. At the direction of the Federal Housing Finance Agency (FHFA), lenders must take a deeper look at the financial health and structural condition of condominium developments before approving Conventional loans.

If you’re buying a condo, the change could mean longer timelines, additional documentation, and the potential for there to be issues with the condo association, even if you’re a well-qualified buyer.

If you own a condo and want to sell it, preparing your property for sale might not be enough. The entire condo property will face greater scrutiny.

The goal of these new requirements is to give lenders a clearer picture of whether a condo project is financially stable and properly maintained.

“The lender has to confirm more details regarding the financial state of the association, such as the budget, reserves, and delinquencies of the owner assessments,” said realtor Alexei Morgado, founder and CEO of Lexawise, a real estate exam preparation company. “But at the same time, insurance, litigation, special assessments, and major repairs have to be reviewed.”

“The purchaser may be eligible for a mortgage personally, but the deal [could] fall through because of the ineligibility of the [condo] project.”

Below, we’ll break down what specifically has changed for condo mortgage reviews and what buyers and sellers can do to be more successful.

What has changed with condo mortgage reviews?

In the past, roughly 40% of all condo mortgage reviews used either Fannie Mae’s Limited Review or Freddie Mac’s Streamlined Review, according to the Community Associations Institute.

These expedited reviews allowed lenders to evaluate fewer details about an overall condo association. Doing so simplified the mortgage process for many condo buyers.

The changes come in the wake of the deadly, partial collapse of the 12-story condominium building in Surfside, Fla. Ninety-eight people were killed.

Under the new guidelines, applications submitted on or after Aug. 3, 2026, will generally no longer qualify for those streamlined reviews, unless a specific exemption applies (like for small condos with 10 or fewer units).

Instead, lenders now must review more information about the condominium association, including its financial reserves, insurance coverage, repair history, special assessments, litigation, and owner payment delinquencies.

And the requirements will likely become even more demanding early next year. Effective Jan. 4, 2027, condo associations must allocate 15% of their annual budget in reserve funds for repairs and replacements to be eligible for Conventional loans through Fannie Mae and Freddie Mac. Currently, that percentage is set at 10%.

That change could put additional pressure on condo associations that have been setting aside less money for future maintenance and repairs. In response, condo associations may raise their dues, which increases costs for current condo owners. For buyers and their lenders, it adds another item to investigate when evaluating whether a building is financially prepared for major expenses.

The added scrutiny could create challenges for buyers.

“There will be more delays and potentially more denials,” said Morgado.

In other words, you could have a near-perfect credit score, stable income, and a large down payment, but you still might not be approved for your preferred condo if it doesn’t pass the more stringent requirements.

Note: The added scrutiny is largely a one-time hurdle for each building, not a recurring one. Once a condo project clears a full review, lenders generally don’t have to repeat it for future buyers in the same building. The biggest slowdown will mostly affect whoever is buying in a project first under the new rules.

How condo buyers can prepare

If you’re in the market for a condo, these new rules make researching the condo association just as important as inspecting the individual unit you want to buy.

Before making an offer, you should request key documents from the condo association.

“Request a budget, reserve study, master insurance, financials, approved special assessments, delinquent information, litigation disclosure, and a mechanical/structural inspection done within the last three years,” advised Morgado.

You should also pay close attention to how the association handles maintenance and long-term planning.

A lower monthly association fee may look attractive, but it could be a warning sign if it means the building has delayed repairs or failed to build adequate reserves. The upcoming increase in the reserve requirement makes that financial picture even more important.

Finally, you should make sure the condo association’s management company can respond quickly to lender requests. Delays in receiving documents or completing lender questionnaires could create problems before closing.

On the flip side, if you plan to buy your condo with cash, you might suddenly have an even greater upper hand. Condo owners who want to bypass the lengthy review process that comes with many financed buyers may accept a slightly lower, but more reliable cash offer.

Buyers using a mortgage aren’t necessarily out of luck if a building fails a review, either. Some lenders will still finance the purchase by keeping the loan in-house rather than selling it to Fannie Mae or Freddie Mac.

However, buyers may need to pay a higher interest rate or make a larger down payment.

What condo sellers need to know

If you already own a condo, these changes can still impact you. For starters, prepare for your dues to potentially increase in 2027 in response to the impending rule change regarding reserve funds.

And when you’re ready to sell, prepare for a potentially longer timeline. Even a renovated unit with desirable features could struggle to attract financed buyers if the condo project has financial or maintenance issues.

If you’re planning to sell your condo soon, Morgado shared some helpful advice.

“I would request the budget, the insurance certificate, the reserve study, any inspection report, the details on the assessment, and the person handling the lenders’ questions before listing the property,” he said.

Doing this work before listing can expedite the process once your condo goes on the market and gives you a better idea of what potential issues could be.