04/02/2026
Hey fellow real estate folks — here’s something every condo buyer and seller should be paying close attention to right now.
Big changes are coming to condo financing, and there’s actually some good news mixed in.
Fannie Mae and Freddie Mac are not lenders — and that’s where a lot of confusion starts.
They don’t give loans directly to buyers.
Instead, they buy mortgages from banks and lenders after the loan is made. This keeps money flowing so lenders can continue issuing new loans — but more importantly, it means they set the standards for what loans are considered acceptable.
If a loan doesn’t meet their guidelines, many lenders simply won’t offer it — or the terms will be less favorable. That’s why their rules quietly shape which condos are easy to finance and which are not.
As for the difference:
Fannie Mae was created to support the broader housing market, primarily purchasing loans from larger banks.
Freddie Mac was designed to expand access and competition, often working more with smaller and regional lenders.
Today, they function very similarly, but together they form the backbone of conventional mortgage financing in the U.S.
In response to the Surfside condominium collapse — where a Florida condo building failed after years of deferred maintenance and underfunded reserves — both lending standards and insurance markets tightened significantly.
Insurance carriers became far more cautious. Premiums surged. Coverage became harder to obtain. Some buildings were flagged as ineligible altogether.
That ripple effect has been real. In markets like Florida, condo sales have slowed considerably due to sticker shock — not just from rising HOA fees, but from the combined weight of insurance costs at two levels: what the association pays to insure the building, common areas and amenities and what individual owners must carry for the inside of their own units. Together, those costs have pushed monthly ownership higher than many buyers expected.
New guidelines are now being rolled out to address these risks.
Starting in 2027, most condo associations will be required to allocate at least 15% of their annual budget to reserves — the building’s savings account for major repairs like roofs, elevators, and infrastructure. Associations will also be expected to follow the highest recommended funding plan from a professional reserve study.
To put that in context: many associations today contribute far less — often in the range of 5–10%, and sometimes even lower. That gap is exactly why this change is happening. For years, some buildings kept monthly fees artificially low by underfunding reserves, which led to deferred maintenance, surprise assessments, and financing challenges.
There is also some welcome relief on the insurance side. The updated guidelines introduce flexibility by allowing certain components, like roofs, to be insured at actual cash value rather than full replacement cost, and easing some prior requirements. The goal is to help more buildings remain financeable while keeping costs from rising even further.
For Buyers:
Amenities are appealing — pools, tennis courts, gyms, clubhouses, extensive landscaping — but more amenities typically mean higher long-term costs.
Monthly common charges are meant to cover operations and reserve contributions. But if reserves are underfunded, special assessments can follow — additional costs on top of your regular dues. For example, a $500 monthly fee could increase by $300 per month for two years to cover a major repair.
A natural question is: shouldn’t that money have already been saved? Often, the answer points to past underfunding.
Before making an offer or investing in inspections, request and review:
• Latest reserve study (including % funded)
• Recent budgets and financials
• Board meeting minutes
• Special assessment history
• Insurance summary
For Sellers:
This news may not feel great at first — but there is time, and there is opportunity.
With these changes not fully taking effect until 2027, boards have a window to get ahead of it. A proactive approach — reviewing reserves, adjusting budgets, and planning for future repairs — can make a meaningful difference in how your property is received.
Buyers today are more informed. They are asking better questions and expecting clear answers.
Choosing a realtor who understands these shifts — how to position your property, what documentation to prepare, and how to navigate conversations with educated buyers — matters. Real estate today goes far beyond presentation and marketing; it requires a solid understanding of the financial and structural side of ownership.
Condos with strong reserves, transparent financials, and manageable insurance are easier to finance, easier to sell, and more stable long term. Properties with underfunded reserves and recurring assessments are facing increased scrutiny in today’s market.
If you’re considering buying or selling a condo, it’s important to look beyond the surface. Let’s take a closer look together and avoid costly surprises. If you are thinking of selling your condo over the next year or so, now is the time to have a conversation. Feel free to reach out to me to ask questions. I am happy to help and to steer you in the right directions.
Explore updated condominium underwriting guidelines affecting financing, project reviews, and insurance requirements for condo developments.
