New Condo Mortgage Rules: What Fannie Mae and Freddie Mac’s Changes Mean for HOA Owners and Buyers

by Oaktree Properties | Aug 12, 2026 | HOA | 0 comments

Starting August 3, 2026, buying a condo with a conventional mortgage got a little more complicated. Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy and guarantee most conventional mortgages in the U.S., have eliminated their streamlined “Limited Review” and “Streamlined Review” processes for condo loans. If you own a unit in an HOA, are on your association’s board, or are thinking about buying a condo, here is what changed and why it matters. 

What Actually Changed

Previously, a lender could approve a mortgage for a condo unit using a Limited Review (Fannie Mae) or Streamlined Review (Freddie Mac), which allowed for a lighter look at the condo association’s finances. Roughly 40 percent of condo mortgage applications relied on this faster path, according to the Community Associations Institute.

As of August 3, most applications will require a Full Review instead. That means lenders now have to take a much closer look at the condo association itself before approving a loan, including its financial reserves, insurance coverage, repair history, any special assessments, ongoing litigation, and how many owners are behind on their dues.

Small associations of 10 units or fewer are exempt and can still qualify for the lighter review.

There’s also a second change on the horizon: both Fannie Mae and Freddie Mac are raising the minimum reserve requirement for associations from 10 percent to 15 percent of the annual budgeted assessment income. That change phases in over the coming months, with a compliance deadline in early January 2027. 

Why the Rules Are Changing

These updates trace back to the 2021 Surfside, Florida condo collapse, which killed 98 people and prompted federal regulators to take a harder look at aging condo buildings nationwide. In the years since, Fannie Mae and Freddie Mac have steadily tightened underwriting standards to flag buildings with deferred maintenance, structural issues, or thin financial reserves before those problems become a buyer’s or lender’s headache.

The Federal Housing Finance Agency, which oversees both entities, is pushing lenders to identify at-risk buildings earlier rather than after a sale has already closed. 

What This Means for Buyers

For a prospective condo buyer, the biggest impact is time. Applications will likely take longer to process because lenders now need more documentation from the HOA itself, not just the buyer. In some cases, a lender may decline a loan altogether if the association doesn’t meet the new standards, even if the buyer is well qualified.

That said, a denial from one lender doesn’t necessarily kill a deal. Some lenders may be willing to keep a loan in their own portfolio rather than sell it to Fannie or Freddie, though that route can come with a higher interest rate or a larger down payment requirement. Cash buyers, who don’t need lender approval at all, may find themselves with a real advantage in this environment.

What This Means for HOA Boards and Owners

This is really where the rubber meets the road for our clients. If your association’s financial documentation isn’t in good shape, an otherwise straightforward sale in your building could stall or fall through, which affects every owner’s ability to sell. 

A few things worth doing now:

• Keep your reserve study current. Lenders can use a qualifying reserve study to demonstrate adequate funding, which is especially useful for associations that don’t budget reserves the way Fannie’s formula expects.
• Get ahead of deferred maintenance. Buildings with significant unresolved repairs, unresolved safety issues, or certain types of special assessments risk being classified as ineligible for conventional financing.
• Review your insurance structure. Associations with high per-unit deductibles on their master policy may need to revisit their coverage to stay in compliance.
• Be transparent with prospective buyers and their lenders. Faster turnaround on document requests from your management company can help keep a sale on track.
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The Bottom Line

These changes don’t mean a building is unsafe or in financial trouble just because a loan gets flagged for extra review. But they do mean HOA boards need to treat financial housekeeping and reserve planning as a priority, not an afterthought, especially with the reserve requirement increase still to come. 

Source: Reporting based on CNBC, “Buying a condo with a mortgage may soon get more complicated. Here’s why” August 1, 2026.