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Fannie Mae and Freddie Mac, who stand behind most condo mortgages, rewrote how condos get approved for financing, and the thing they review is the association, the HOA behind the building, so that is the language this page uses. Here is what changed, when each piece lands, and the questions we keep hearing. Save this link; we keep it current.
Every date below runs off the loan application date, not the closing date. Apply before a deadline and the older rule still covers that loan.
| Date | What changed |
|---|---|
| March 18, 2026 | An HOA of ten units or fewer, counted across the whole association, can often skip the review entirely. The old cap that failed an association where investors owned more than half the units is retired. |
| July 1, 2026 | The association’s master insurance policy deductible is capped at $50,000 per unit. |
| August 3, 2026 | The short-form review is retired: every reviewed condo loan now gets the full look at the HOA. Reserve studies must be under 3 years old and funded at the level they recommend. |
| January 4, 2027 | The reserve minimum rises from 10 percent to 15 percent of the association’s budgeted income, for applications dated that day or later. |
Source: Fannie Mae Lender Letter LL-2026-03. Freddie Mac made matching changes.
Most condo loans used a short-form review of the association. Quick, but shallow, and a bigger down payment could skip the deeper look entirely.
Every reviewed loan gets the full look at the association behind the building: its budget, savings, insurance, and how many owners are behind on dues, no matter the size of the down payment. It adds time, so the HOA’s paperwork gets ordered on day one.
An association had to put at least 10 percent of its budget into reserves, the repair fund.
Still 10 percent today, rising to 15 percent for loan applications dated January 4, 2027 or later. An HOA that saves too little can put standard mortgages out of reach until it catches up.
A reserve study could sit on a shelf for years, and the association could fund its cheapest option.
The study must be under 3 years old, and the HOA must fund the level it recommends. An association standing on a fresh study it fully funds is measured by that study rather than the flat percentage line.
Association deductibles could run very high, and buyers rarely saw them until late.
Since July 1, the association’s master policy deductible is capped at $50,000 per unit, and your own unit policy has limits to meet as well.
Small associations went through much of the same review as big ones.
An HOA with ten units or fewer can now often skip the review entirely. The count is the association’s, not one building’s: a 6-unit building that belongs to a 60-unit association is a 60-unit HOA and gets the full look. Good news for Chicago’s vintage walk-ups that are their own association, though one tied to a master association cannot use the shortcut, the insurance rules still apply to everyone, and a lender can always choose to look anyway.
An association where investors owned more than half the units could not qualify.
That cap is retired, so some associations that used to fail on that point alone now qualify.
The association now matters as much as the unit. When you like a condo, we pull the HOA’s budget, reserve study, insurance certificate, and condo questionnaire as soon as they’re made available to us. An association that passes these checks is also simply a healthier place to own, which protects your resale later.
Usually the question never comes up. The 15 percent check lives inside the full review, and an HOA with ten units or fewer, counted across the whole association, can usually skip that review entirely, so nobody reads the reserve line at all. But skipped is not exempt: an association that belongs to a master association goes through the review like anyone else, a lender can always choose the full review on any HOA, and whenever the review runs, the 15 percent applies, six units or sixty.
An association is warrantable when it passes the checks above, meaning Fannie Mae and Freddie Mac will stand behind mortgages written on its units. Unwarrantable means the HOA, not you, missed one of the marks, so most lenders cannot write a standard mortgage there for anyone, however strong the buyer. It is always about the association; your credit, income, and down payment never make an HOA unwarrantable.
Yes. Unwarrantable narrows the road; it does not close it. Some lenders keep these loans on their own books and still lend there, usually with more down and a higher rate, cash always works, and a board can fix the issue, fund the reserves, adjust the insurance, and become warrantable again. In our experience, most associations, though not all, are already in compliance or close to it.
Not anymore. That was exactly how the old short-form review worked, and it was retired on August 3. The size of the down payment no longer changes how the association gets reviewed; the only surviving shortcut is the small-HOA waiver above, and it ignores the down payment too.
It applies to loan applications dated January 4, 2027 or later. The date on the application is what counts, not the closing date, so a buyer who applies in December 2026 is reviewed against today’s 10 percent line even if the closing lands in 2027.
An outside specialist walks the building and writes down what will need repair or replacement, roughly when, and what the association should be saving each year to be ready. The new rules give that document teeth: it must be under 3 years old, and the HOA must actually fund the level it recommends rather than a cheaper option.
It depends entirely on where your association stands. An HOA already saving at its study’s recommended level may feel nothing. An association that has been saving less has to close the gap somehow, and that can mean higher monthly assessments or a one-time special assessment. Boards that start early get to spread the catch-up thin; boards that wait pay it all at once.
The association’s budget, reserve study, and condo questionnaire answer it, and we read these documents every week. Send us the address, whether you are buying, selling, or sitting on a board, and we will tell you what we see.
We will pull its paperwork and walk you through where it stands, no charge, no obligation.
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