Fannie Mae and Freddie Mac Condo Financing Changes for 2026–2027

What changed in 2026, and what starts in 2027?

Small projects have additional review options

Fannie Mae expanded its Waiver of Project Review to qualifying new and established projects with ten or fewer units. For five- to ten-unit projects, the project cannot be part of a master association or larger development. Freddie Mac expanded Exempt From Review to qualifying two- to ten-unit projects; five- to ten-unit projects cannot be part of a master association under this small-project option. These options became available March 18, 2026. Remaining agency conditions still apply. A waiver is not a promise that every small condo qualifies. See Fannie Mae’s waiver requirements and Freddie Mac Bulletin 2026-C.

The simplified review paths retired August 3, 2026

For applications dated on or after August 3, 2026, Fannie Mae retired Limited Review. Established projects now use Full Review or an applicable waiver. Freddie Mac retired Streamlined Review for applications received on or after that date; its established-project, reciprocal and eligible exempt paths remain relevant. Putting more money down does not recreate a retired review option. Sources: Fannie Mae LL-2026-03 and Freddie Mac 2026-C.

Rental concentration rules changed, but ownership still matters

Fannie Mae removed the 50% investment-property concentration limit for investor loans in established projects using Full Review. Freddie Mac removed the corresponding 50% owner-occupancy requirement for established projects. New-project presale requirements remain. These changes do not eliminate separate restrictions concerning one person or company owning multiple units. Ask the lender to distinguish rentals throughout a project from concentrated ownership. See the Fannie Mae announcement, Freddie Mac FAQs and Fannie Mae’s project restrictions.

The 15% reserve allocation begins January 4, 2027

For applicable reviews, the minimum annual replacement-reserve allocation increases from 10% to 15% of annual budgeted assessment income. Fannie Mae applies this to Full Review loans with application dates on or after January 4, 2027; Freddie Mac uses applications received on or after January 4, 2027. This measures an annual budget contribution, not a requirement that the bank balance equal 15% of property values. Sources: Fannie Mae’s effective-date notice and Freddie Mac’s bulletin.

Illustration: if the applicable annual assessment-income base is $200,000, 10% is $20,000 and 15% is $30,000. The lender must determine the correct calculation, permitted exclusions and review method. Qualifying reserve studies and other agency provisions can change the analysis; this is not an identical rule for every association or loan.

Read the reserve study alongside the budget

A reserve study inventories major common components, estimates their remaining life and future costs, and develops a funding plan. Think about roofs, roads, siding, balconies, elevators and mechanical systems for which the association is responsible. A substantial bank balance can still be insufficient if several expensive replacements are approaching.

When an acceptable study is used in place of the standard reserve-percentage test, the agencies require the budget to fund the highest recommended allocation. For applications on or after August 3, 2026, a baseline method that lets reserves approach zero cannot support that exception. Merely having a study is not enough. The lender must assess its acceptability and the actual funding. See Fannie Mae’s Full Review and reserve-study requirements and Freddie Mac’s reserve-study explanations.

Repairs, special assessments and insurance deserve an early look

An attractive unit cannot resolve a serious problem elsewhere in the project. Ask about structural conditions, foundations, water intrusion, roofs, balconies and shared mechanical systems. Routine maintenance differs from critical repairs. Under applicable review rules, unresolved critical repairs can make the project ineligible. Obtain the underlying reports rather than relying on a verbal assurance. See Fannie Mae’s repair standards.

A special assessment is not automatically disqualifying. Its purpose, repair status, amount remaining, collection schedule and owner payments matter. Paying your unit’s share does not itself resolve an unfinished critical repair. Ask whether the work is fully funded or another assessment may be needed. Give the lender the assessment notice and supporting documents.

The HOA master insurance policy can also be part of the review. Ask about coverage amounts, exclusions, deductibles and material changes at renewal, and discuss your own unit policy with an insurance professional. The master policy does not necessarily cover everything inside your unit. Agency requirements contain exceptions and depend on the project documents; do not assume every association needs the same policy. See Fannie Mae’s master-policy requirements.

Before Writing an Offer on a Condo, Ask These Questions.

Ask the seller, association or property manager for written answers and supporting documents. Share them with your lender and Realtor early.

1. Are there current or planned special assessments? Request the purpose, amount, payment schedule and repair status so you can budget your obligation and flag review concerns.
2. Does the association have a current reserve study? Ask for the complete study and updates, not just a summary or a statement that one exists.
3. How much money is in reserves? Compare available funds with the work ahead; the balance alone does not show whether funding is adequate.
4. How much of the annual budget is allocated to reserves? Separate this yearly contribution from accumulated savings and give the lender the current budget.
5. Are major repairs planned? Ask for scope, estimates, timing and funding, including work that has been discussed but not approved.
6. Is there deferred maintenance? Request inspection reports and board minutes that explain unresolved conditions and planned responses.
7. Is the HOA involved in litigation? Provide the details to the lender. The nature and potential effect of the dispute matter; a yes-or-no answer is incomplete.
8. Are many owners delinquent on HOA dues? Delinquencies can affect cash flow and applicable project-review tests.
9. Is the association adequately insured? Obtain current insurance information and flag cancellations, nonrenewals or material coverage reductions for review.
10. How many units are owner-occupied versus rented? The project’s status and review path matter. Do not apply an old blanket 50% rule to every project.
11. Does one person or company own multiple units? Concentrated ownership is a separate issue from the overall number of rentals.
12. Have recent buyers had difficulty obtaining conventional financing in the project? Find out why and whether anything changed. A prior approval or denial does not decide your transaction.

Ask your lender this question directly

“Do you see anything about this condo project that could prevent it from qualifying for my loan?”

Give the lender the exact condominium development name and property address as early as possible. A mortgage preapproval evaluates the borrower; it does not necessarily establish that the project is eligible. Ask what remains to be reviewed and which documents are missing.

Protect the purchase timeline and compare the full payment

Discuss appropriate condominium-document and financing protections with your Realtor and, when needed, an attorney before signing. Exact contract language is a legal matter. Ask who will obtain the documents, when they will arrive, and whether your review deadlines allow enough time for lender questions.

For Michigan condo financing in Grand Rapids, East Grand Rapids, Ada or Cascade, compare the actual development rather than assuming nearby projects have the same costs. The same approach helps buyers considering Holland, Grand Haven and Muskegon. Association responsibilities and obligations belong beside the price in your comparison.

Use the Michigan home affordability calculator with HOA dues, taxes and insurance, and separately account for assessments and your own repair cushion. Review conventional mortgage options and the first-time buyer guide. If you are comparing VA or FHA financing, ask about that program’s condo requirements; this article describes Fannie Mae and Freddie Mac changes.

For Realtors: identify document gaps early

Before an offer, or immediately afterward, connect the buyer’s lender with the exact project information. Request the budget, reserve study, insurance documents, assessment notices and relevant repair reports promptly. Ask the association who handles lender questionnaires and what its response time and fees are. Early collection gives the parties time to investigate a concern before appraisal, financing and contract deadlines converge.

For a condo listing, assemble available project documents before a buyer asks. Avoid advertising a project as universally approved based on an earlier closing. Current records and a specific lender review are more useful than a broad promise.

For HOA boards: connect the budget to the buildings

Review the operating budget, replacement-reserve contribution, current reserve study, upcoming capital expenditures, deferred maintenance, insurance and special assessments together. Record what is funded, what remains uncertain and who can supply supporting documents to lenders.

A project’s financial condition can affect owners’ access to conventional mortgage financing and potentially its marketability. Owners planning to refinance may face project questions too. Work with the association’s management, reserve specialist, insurance professional and legal adviser on the underlying obligations; changing a budget percentage alone does not resolve every eligibility issue.