Condo financing update
What changed in condo financing this year — and what it means here
Fannie Mae updated how condo and co-op projects get reviewed and how much a building has to keep in reserves. Here's what's different, and what it means if you're shopping a condo on the Gulf Coast.
What changed
"Limited Review" is going away for most established projects
For years, many established, low-risk condo and co-op projects could qualify for a lighter-documentation path called Limited Review — a shortcut that skipped some of the deeper project underwriting a full review requires.
Fannie Mae is retiring that shortcut. Under Lender Letter LL-2026-03, loan applications dated on or after August 3, 2026 generally need a full project review instead, even for buildings that would have breezed through Limited Review before. That means more documentation about the association's budget, insurance, litigation status, and reserves gets pulled and reviewed on every file.
What changed
Reserve requirements are going up
The same Lender Letter raises the minimum reserve fund allocation for condo and co-op associations from 10% to 15% of the project's annual budgeted assessment income, with mandatory compliance for loan applications dated on or after January 4, 2027.
In plain terms: associations now need to be setting aside more money for future repairs and capital needs. Buildings with healthy, well-funded reserves shouldn't feel much of a difference. Older communities that have been underfunding reserves, deferring a reserve study, or leaning on special assessments instead of routine funding are the ones most likely to run into project eligibility questions.
What it means here
What this means if you're shopping a condo on the Gulf Coast
Sarasota, Lakewood Ranch, and the barrier islands have plenty of older condo stock, so this is worth knowing before you write an offer, not after.
Ask early whether the building has a current reserve study and how it's funded — the HOA or condo association can usually provide this. If the project hasn't gone through a full review recently, or the association's financials look thin, it's better to find that out during your search than during underwriting.
Get the building name or address to your lender as soon as you're seriously considering a unit. Checking project eligibility up front, before you're under contract, saves time and avoids surprises later in the file. Guideline figures above reflect Fannie Mae Lender Letter LL-2026-03; specific project and loan eligibility still depend on the individual association's financials and the investor's review at the time of application.
Have a condo in mind?
Send me the building name or address and I'll check the project review status before you go any further — no cost, no obligation.