Major Condo Lending Changes You Need to Know

There have been several updates from Fannie Mae and Freddie Mac that affect condo financing. Some of these changes make it easier to finance certain properties, while others may require more documentation and stricter financial reviews from condo associations.

Here is a simple breakdown of what is changing.

The Good News

Smaller Condo Buildings May Be Easier to Finance

Project review waivers can now apply to condo buildings with up to 10 units. This helps smaller and boutique buildings that previously faced more challenges during underwriting.

Investor Rules Have Loosened

Investor concentration limits are no longer a major barrier for full project reviews in established buildings. This change may allow more condos to qualify for financing.

New Requirements to Be Aware Of

Limited Review Will Be Phased Out

Starting August 3, 2026, condos with more than 10 units will require a full project review. This means lenders will need more documentation, which may lead to longer approval timelines.

Association Reserves Are Getting More Attention

If a condo association contributes less than 10 percent of its budget to reserves, a reserve study will now be required. This could affect smaller buildings that do not currently maintain strong reserve funds.

Reserve Requirements Are Increasing

Beginning January 2027, the minimum reserve contribution will increase from 10 percent to 15 percent. Some associations may need time to adjust their budgets to meet this requirement.

What This Means for Buyers and Sellers

Smaller buildings may offer more financing opportunities.Larger buildings may face stricter review and longer loan timelines.Condo association financials will become more important during the loan process.Deals may need to be reviewed earlier to avoid surprises during financing.

If you own a condo or are considering buying or selling one, these changes are important to understand. Condo financing may become more selective, and not all buildings will qualify the same way they did in the past.