Quick answer: Lenders now review the condo project, not just you. Fannie Mae and Freddie Mac guidelines look at the association’s finances, reserves, deferred maintenance and master insurance. A strong borrower can still be turned down if the condo project does not meet guidelines, so check the project early.
Getting a mortgage on a condominium just changed.
Fannie Mae and Freddie Mac updated the guidelines lenders use (see Fannie Mae’s Lender Letter LL-2026-03) to determine whether a condo project is eligible for conventional financing. The changes mean lenders may need to take a closer look at the financial health, insurance and physical condition of the entire condo project—not just the borrower and individual unit.
Here are four areas that could make condo approval more challenging.
1. Condo Project Financial Reviews Are Getting Deeper
Previously, certain condo loans could qualify with a less extensive review of the condo association.
That option has largely gone away. Fannie Mae retired its Limited Review process for loan applications dated on or after August 3, 2026.
For many conventional condo loans, lenders now need more information about the association and project before determining whether the condo is eligible for financing.
That can include reviewing the association’s budget, reserves, delinquent HOA dues, insurance, special assessments and other financial information.
Bottom line: For conventional loans the Condominium Project must be approved, just like the borrower.
2. Condo Reserve Requirements Are Getting More Scrutiny
Mortgage agencies want to know that condo associations are putting enough money aside to maintain their properties and handle future major expenses.
If an association uses a professional reserve study to demonstrate adequate funding, newer guidelines place greater emphasis on whether the association is actually budgeting according to the study’s recommendations.
And for loan applications dated on or after January 4, 2027, Fannie Mae increases its standard minimum annual reserve contribution for applicable condo reviews from 10% to 15% of assessment income.
Associations with poorly funded reserves could therefore face greater financing challenges.
3. Deferred Maintenance and Major Repairs Can Block Condo Financing
The physical condition of the entire project can affect financing.
Lenders may need information about structural problems, significant deferred maintenance, evacuation orders and major repairs.
Special assessments can also raise additional questions—particularly when they relate to significant repairs or indicate that the association doesn’t have sufficient reserves to cover necessary work.
This means a unit can be in excellent condition while a problem elsewhere in the project affects mortgage eligibility.
4. Condo Master Insurance Can Create Problems
Condo associations generally maintain master insurance policies covering portions of the buildings and common areas.
Mortgage guidelines contain specific requirements for that coverage, and recent changes have updated several condo insurance standards.
The lender may need to evaluate the association’s master policy, coverage amounts and deductibles. Depending on how the master policy is structured, the individual unit owner’s insurance coverage may matter as well.
Adequate insurance is no longer something to figure out at the end of the mortgage process.
What Do the New Condo Mortgage Rules Mean for Buyers and Owners?
The most important takeaway is simple:
Qualifying the borrower is only part of qualifying a condo loan. The condo project matters too.
These guidelines can affect someone purchasing a condo, refinancing an existing mortgage or accessing equity from a condo they already own.
And a condo that doesn’t initially meet one set of requirements isn’t necessarily impossible to finance. Different loan programs and project-review options may provide alternatives.
If you are buying a condo, speak with a Tithe Lending loan officer before you make an offer. They can give you the list of condo project documents we need, so you can request them early. A project issue is much easier to handle before you are under contract.
Frequently Asked Questions
What is a non-warrantable condo?
A condo project that does not meet Fannie Mae or Freddie Mac eligibility guidelines, for example because of underfunded reserves, high delinquent dues, major deferred repairs or insurance problems. These condos can be harder to finance conventionally.
Can I still get a mortgage on a condo that does not meet Fannie Mae or Freddie Mac guidelines?
Sometimes. Other loan programs and project-review options may be available, often with different down payment, pricing or documentation requirements. It is best to ask a lender before you go under contract.
Do the condo guidelines apply to refinances and home equity loans?
Yes. The project review can apply when you buy a condo, refinance an existing mortgage or access equity in a condo you already own.
Next step: Buying a condo? Talk to a Tithe Lending loan officer about the project documents you will need, and get pre-approved before you go under contract.
No obligation. It only takes a few minutes.
Sources
- Fannie Mae, Lender Letter LL-2026-03 (March 18, 2026)
- Full text of LL-2026-03 with effective dates (copy hosted by a third party)
Tithe Lending LLC | NMLS #2439006 | Equal Housing Lender. General information only; not a loan offer or financial, tax or legal advice.