08/03/2026
New to Condominium Project Approvals
From our mortgage expert!
Good Evening
I hope you are enjoying your summer and this beautiful weekend.
Please note the following changes to Condo Review Process that are being implemented as of August 3, 2026 by both Fannie Mae and Freddie Mac.
Please be mindful of that when drafting a contract for condos/townhouses/coops. Not all Associations may be up to code with those changes yet, so we may experience a higher number of issues with Condo Approvals.
Any questions please let me know 🙂
Fannie Mae & Freddie Mac Condo Review Changes — What’s Changing and When
Fannie Mae and Freddie Mac have introduced major updates to condo lending rules that will significantly affect how mortgage lenders evaluate condominium projects, with key changes taking effect August 3, 2026.
Key Changes
1. Retirement of Fast‑Track Reviews
Limited Review (Fannie Mae) and Streamlined Review (Freddie Mac) are being eliminated for loan applications dated on or after Aug. 3, 2026 National Mortgage Professional+1.
These fast‑track paths previously allowed buyers with higher down payments to bypass deep dives into association finances.
From now on, every condo project with more than 10 units will require a Full Review unless it qualifies for a waiver www.condo-approval.com+1.
2. Higher Reserve Requirements
Reserve funding must now be at least 15% of annual budgeted assessment income (up from 10%) for loans dated on or after Jan. 4, 2027 Markets Insider+1.
This is part of the Warrantability Checklist, which also includes:
≤15% of units 60+ days delinquent
Single‑entity ownership in 21+ unit projects
At least 50% units sold (presale)
Master insurance at replacement cost with per‑unit deductible capped at $50,000 (from July 1, 2026)
Commercial space ≤35% of project governingdocs.dev.
3. Expanded Waiver of Project Review
Waivers now apply to projects with up to 10 units, provided they are not part of a larger master association or multi‑phase development www.condo-approval.com.
4. Investor Concentration Limit Removed
The long‑standing 50% investor concentration cap for established projects is gone, but the single‑entity ownership rule still applies governingdocs.dev+1.
Why the Changes?
The GSEs aim to identify financially or structurally weak condo buildings and reduce the risk of unexpected special assessments or higher dues CNBC. The shift focuses more on the project’s financial health than just the borrower’s credit.
Impacts
Lenders: More documentation needed — budgets, reserve accounts, insurance, litigation, special assessments, and maintenance records National Mortgage Professional.
Buyers: Longer approval times; possible denials if the condo fails the new standards CNBC+1.
Associations: Must prepare budgets, reserve contributions, and insurance to meet the new thresholds Markets Insider.
Key Dates
Aug. 3, 2026: Elimination of Limited/Streamlined Reviews; Full Review required for most projects National Mortgage Professional+1.
Jan. 4, 2027: Reserve requirement rises to 15% Markets Insider+1.
July 1, 2026: Master insurance deductible cap at $50,000 governingdocs.dev.
Bottom line: If you’re are dealing with a condo, expect more scrutiny of the building’s finances and reserves.
Maggie Oledzki
NMLS # 485724
USBank Legends of Possible Award Recipient 2018, 2019, 2020, 2021, 2022 and 2023
Five-Star Professional Award Recipient 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026
Scotsman Guide Top Originator Award Recipient 2023,2024, 2025, 2026
Senior Mortgage Loan Originator, Certified Construction Loan Specialist
Mortgage.usbank.com/maggieoledzki
Cell 973-919-5803 | e-Fax 866-535-4583
822 Kearny Avenue, Kearny NJ 07032
1 Main Street, Suite 203,Chatham, NJ 07928
[email protected]
US Bank Home Mortgage
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As a Mortgage Loan Originator right here in Chatham, NJ, I've been helping homebuyers just like you secure and refinance mortgages every day.
