Updated September 2026. By Aradhana Bhandary, REALTOR® | SRES®, Selling Central California, serving Fresno, Clovis, Madera and the Central Valley.
Buying or selling a condominium involves something that buyers of most single-family homes do not have to deal with: the lender may need to approve not only the borrower, but also the condominium project itself. Fannie Mae and Freddie Mac have changed several condominium project-review requirements involving streamlined reviews, HOA reserves, investor concentration and property insurance. A financially qualified buyer does not automatically mean the condominium itself will qualify for conventional financing.
For conventional loans backed by Fannie Mae or Freddie Mac: Limited or streamlined condo project reviews were retired for loan applications on or after August 3, 2026. Certain condominium projects with 10 or fewer units may qualify for an exemption or waiver from the more extensive project-review process. HOA reserve-study requirements have become stricter. The standard reserve allocation remains 10% in 2026, but increases to 15% for applications received on or after January 4, 2027. Certain owner-occupancy or investor-concentration restrictions have been relaxed. Property-insurance rules now provide additional flexibility for roof coverage while maintaining broader insurance requirements.
Fannie Mae previously offered a Limited Review option for certain established condominium transactions and Freddie Mac offered a similar Streamlined Review process. For loan applications dated or received on or after August 3, 2026, those review options were retired. Many attached condominium projects that previously qualified for a reduced review now require a more comprehensive project review unless the property qualifies for another approved review method or an exemption. A Full Review may evaluate the HOA operating budget, replacement reserves, delinquent HOA assessments, special assessments, insurance coverage, litigation, significant deferred maintenance, structural or mechanical inspection reports, critical repairs, ownership concentration and other project eligibility requirements.
Fannie Mae expanded its Waiver of Project Review to qualifying condominium projects containing two to ten units. For projects with five to ten units, the project generally cannot be part of a larger development or master association to qualify for the waiver. Freddie Mac has also expanded its Exempt From Review treatment for qualifying smaller condominium projects. An exemption from a full project review does not mean every underwriting requirement disappears.
Under the current Full Review standard, the HOA budget generally must allocate at least 10% of annual budgeted assessment income toward replacement reserves for capital expenditures and deferred maintenance, unless an acceptable reserve study supports an alternative under the applicable requirements. Fannie Mae and Freddie Mac have announced that the minimum allocation will increase from 10% to 15% for applicable loan applications received on or after January 4, 2027. It would be inaccurate to say that every condo HOA must already maintain a 15% reserve allocation in September 2026, but associations operating close to the 10% minimum may need to adjust their 2027 budgets.
For applications beginning August 3, 2026, lenders can no longer rely on a baseline funding methodology when using a reserve study for this purpose. When a qualifying reserve study contains multiple recommended funding levels, lenders must use the highest recommended reserve allocation applicable under the rules. An HOA that has historically kept dues low by postponing reserve contributions may face pressure to increase regular assessments, levy special assessments or otherwise improve its financial position.
Under current Full Review requirements, generally no more than 15% of the project's total units may be 60 days or more past due on common expense assessments, and similar restrictions apply to delinquent special assessments. The payment behavior of other owners in the community can potentially affect the financing options available to someone buying or selling an individual unit.
Fannie Mae and Freddie Mac also evaluate condominium projects for significant physical-condition concerns, including critical structural repairs, significant deferred maintenance, evacuation orders, certain unresolved inspection findings, major safety issues and some types of litigation associated with the physical condition of the project. A project with serious unresolved problems may not qualify for conventional financing until the lender can establish that applicable eligibility requirements have been satisfied.
Fannie Mae retired its previous 50% investment-property concentration limit for established projects reviewed under the Full Review option for investor loans, and Freddie Mac revised certain owner-occupancy requirements for established condominium projects. This should not be confused with single-entity ownership restrictions: a project can still encounter eligibility problems when one person, company, investor group or other single entity owns too large a percentage of the units.
Recent Fannie Mae and Freddie Mac updates provide more flexibility for roof coverage. Roofs must still be insured, but they do not necessarily have to be insured on a replacement-cost basis. For Freddie Mac, if a master policy uses a per-unit deductible, that deductible generally may not exceed $50,000 per unit, along with other applicable deductible and coverage requirements. The master policy must still comply with the applicable GSE insurance standards.
Investigate the HOA earlier than you might with a typical single-family purchase. Ask about the HOA operating budget and how much assessment income goes to reserves, the most recent reserve study, current and planned special assessments, master insurance coverage, major repairs or deferred maintenance, and HOA delinquencies. Most importantly, involve the lender early. Relocating buyers can start with /moving-to-fresno and current homes at /listings.
Before listing, consider asking an experienced condominium lender what documentation is likely to be required, and determine whether the HOA can readily provide its current budget, reserve information, the most recent reserve study, master insurance documentation, information about special assessments and pending litigation, requested inspection reports and other lender questionnaire information. The lender makes the financing and project-eligibility determination; the REALTOR®'s role is to recognize potential issues early and coordinate with the buyer, seller, HOA and lender. See /selling-a-home-in-fresno and /senior-real-estate-fresno.
A non-warrantable condo is a condominium project that does not satisfy the applicable eligibility requirements for conventional financing through Fannie Mae or Freddie Mac, for reasons that can involve HOA finances, reserve funding, delinquent assessments, critical repairs, insurance, litigation, excessive single-entity ownership, commercial use or other project characteristics. A project can fail one lender's conventional review without making the condominium impossible to finance; another lender may offer a portfolio loan or another financing program.
The financial and physical health of the HOA can influence whether conventional financing is available, future HOA dues, potential special assessments, the pool of future buyers and ultimately the marketability of the property.
Aradhana Bhandary, REALTOR® | SRES®, Selling Central California, Fresno • Clovis • Central Valley. Planning a condominium purchase or sale? Aradhana can help you identify the HOA questions to ask, organize relevant project documents and coordinate with your lender early in the transaction. Contact at /about-aradhana#contact.
Fannie Mae Selling Guide, Fannie Mae Lender Letter LL-2026-03, Fannie Mae Condo Project Manager, Freddie Mac Single-Family Seller/Servicer Guide Chapter 5701, Freddie Mac Condominium Unit Mortgage guidance and Freddie Mac Condo Project Advisor. Condominium lending guidelines change periodically and individual lenders may impose additional requirements. This article is for general real estate information and is not mortgage, legal, insurance, HOA or financial advice. Buyers and sellers should consult the appropriate lender and other qualified professionals regarding their specific transaction.