The HOA and Mortgage Approval
New Condo Guidelines: The changes are fairly technical—meaning the underwriters had to determine the Condos eligibility for approval. This blog post is written for home buyers, not lenders. The big story is: Condo approval is changing, and the HOA matters more than many buyers realize. Fannie Mae retired its Limited Review process for applications dated on or after August 3, 2026, while also changing reserve requirements and expanding some project-review waivers..
Here’s something condo buyers need to know: Getting approved for the mortgage is only half the equation. The condo project itself has to qualify, too
Fannie Mae has made significant updates to its condo project review requirements.
One of the biggest changes: the limited Review process has been retired for loan applications dated August 3, 2026 and later. That means some condo projects that previously had a simpler review process may now require a Full Review or qualify under a PROJECT REVIEW WAIVER.1
and there’s another important change coming:
REPLACEMENT RESERVE REQUIREMENTS are increasing from a minimum of 10% to 15% of the annual budgeted assessment income when the Full Review process is used, effective for applications dated January 4, 2027 and later.2
Why should a Buyer care?
Because your condo’s financial health can affect your ability to get financing.
Things like:
- HOA Reserves
- Deferred maintenance
- Critical Repairs
- Master Insurance coverage
- Special assessments
- The overall financial condition of the project
can all become part of the lending conversation. Fannie Mae says INSUFFICIENT MASTER INSURANCE and CRITICAL REPAIR ISSUES are currently among the leading reasons a condo project can be considered INELIGIBLE.
So, just a reminder… before you fall in love with the kitchen, the view, or the rooftop…
It’s important to inquire before you make an offer—find out first, if the specific condo project is eligible for financing. It’s the whole building, not just the unit you want to purchase.
You may also request your Real Estate Agent to relay the message to check in with the Mortgage Lender, to review the project EARLY IN THE PROCESS—before showing appointments.
FOR CONDO SELLERS—This matters to you, too.
If you’re selling a condo, the buyer isn’t the only one who needs to pay attention to these changes.
Your condo’s financing eligibility can affect your pool of potential buyers. Yes… unfortunately. This is the reality. If a buyer’s lender discovers issues with the HOA’s reserves, insurance, repairs, budget, or overall project eligibility, that could limit the financing options available to the buyer—and potentially put your SALE AT RISK! Consult with me before you sell.
In other words…
you may have a perfectly qualified buyer who can’t get the loan they need because of the building.
That’s why sellers should consider having their HOA documents, insurance, financials, and any known project issues reviewed before putting the condo on the market.
Your condo unit may be a beautiful unit, positioned at a competitive price, and located in a great neighborhood—but if financing becomes difficult, the building itself can become the obstacle to the sale!
FOR CONDO HOME SELLERS—knowing the project’s lending status early can mean fewer surprises, fewer failed transactions, less headache, and a smoother path to closing.
HOME BUYERS—If you would like to know what your current income could qualify for and would like to get more information or to find out an alternative approach to home affordability.
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