Quick answer: In spring 2026, Fannie Mae and Freddie Mac eliminated the “limited review” option for condo mortgages, meaning nearly every condo building now requires a full underwriting review. At the same time, the agencies made other rules easier — waiving full reviews for small HOAs (10 units or fewer) and dropping the cap on investor-owned units. The biggest concern for affordability is a new requirement that HOA reserve funds jump from 10% to 15% of the budget, which could mean higher HOA fees with little transition time.
If you’re buying, selling, or already own a condo, these changes affect how long your loan takes to close, whether your building even qualifies for conventional financing, and how much your monthly HOA dues might rise. Here’s what changed, why, and what it means for you.
Why Are Condo Lending Rules Changing in 2026?
The short version: these updates are a direct response to the 2021 Surfside, Florida condo building collapse, which killed 98 people.
After investigators found that the building needed major structural repairs but its HOA hadn’t saved enough money to pay for them, Fannie Mae and Freddie Mac (known as the government-sponsored enterprises, or GSEs) stepped in. Because these two entities back roughly half of all U.S. home purchases, their lending standards effectively set the rules for the whole condo market.
In the aftermath, the GSEs required:
- Engineering and structural safety studies for condo buildings
- Financial studies and disclosures from HOAs
- Lender verification that these studies were completed and any needed repairs were documented
Those 2021 rules also created a “limited review” shortcut: buyers with a down payment of 25% or more (or other strong financial factors) could skip some paperwork. Everyone else went through a “full review,” which meant collecting complete documentation and verifying every GSE requirement.
After a few years of real-world experience with those post-Surfside rules, the GSEs decided some parts were working and others weren’t. The spring 2026 changes are the result.
What Changed in the 2026 Condo Lending Rules?
1. Limited reviews are gone
The biggest shift: the limited review option has been eliminated entirely. Even well-qualified buyers with large down payments must now go through a full underwriting review of the condo project. This is expected to slow down some closings and increase documentation requirements across the board.
2. Small HOAs get a break
To offset that added burden, the GSEs created a new waiver: condo associations with 10 units or fewer are no longer required to complete a full review. This should make it easier to finance units in small buildings, which previously faced some of the toughest scrutiny relative to their size.
3. The investor-unit cap is gone
Previously, a condo building could lose eligibility for conventional financing if more than 50% of its units were owned by investors rather than owner-occupants. That cap has been removed.
- Upside: More buildings — especially those with a lot of rental units — now qualify for financing, which should support demand and property values.
- Downside: Owner-occupant buyers may face more competition from investors in buildings that previously would have been off-limits to heavy investor ownership.
4. HOA reserve requirements jumped from 10% to 15%
This is the change generating the most concern. HOAs must now keep 15% of their budget in reserves, up from 10% — a 50% increase. Alternatively, an HOA can commission a reserve study, but it must adopt the highest funding estimate that study produces.
Why it matters: this requirement is being phased in on a short timeline, giving many HOAs little room to raise dues gradually. For condo owners on fixed incomes — retirees, in particular — or in regions already facing higher insurance premiums and property taxes, the jump in reserve funding could translate directly into steep HOA fee increases.
5. A (mostly) untapped tool for easing the process
Fannie Mae’s Condominium Project Manager (CPM), launched in 2023, is a database of condo projects that already meet Fannie Mae’s standards. Once one lender submits documentation and a project is approved in CPM, every approved lender can see that status — meaning future buyers in that building may not need a fresh review at all, saving time and redundant fees.
The catch: real estate agents cannot access CPM or submit documentation unless they’re officially designated as the HOA’s representative. The National Association of REALTORS® (NAR) has pushed back on this restriction, arguing that agents are often involved in the financing conversation earlier than anyone else and should have access to the tool.
How Do These Changes Affect Condo Buyers?
- Expect more paperwork and potentially longer closing timelines, even with a large down payment, since the limited review shortcut no longer exists.
- Small condo buildings (10 units or fewer) may now be easier — not harder — to finance, thanks to the new waiver.
- Buildings with heavy investor ownership that previously couldn’t get conventional financing may now qualify, opening up more inventory.
- Ask about HOA reserve funding early. A building transitioning to the new 15% reserve requirement (or a high reserve-study estimate) could see a special assessment or a jump in monthly dues shortly after you close.
How Do These Changes Affect Current Condo Owners and HOAs?
- HOA boards should budget now for the higher reserve requirement, since the transition window is tight.
- Owners — especially retirees or those on fixed incomes — should ask their HOA board directly how and when reserve funding will change, and what that means for monthly dues or special assessments.
- HOAs in areas already dealing with rising insurance costs or property taxes may feel a compounding affordability squeeze.
- Small associations (10 units or fewer) benefit from reduced review requirements, which may make units in these buildings more attractive to future buyers and easier to resell.
What Is NAR Doing About These Changes?
NAR has told the GSEs directly that it’s concerned about two things: the size of the reserve increase and the short timeline HOAs have to comply. NAR argues this combination could create real affordability problems for both current owners and prospective buyers, potentially slowing the “trade-up and trade-down” market that depends on condos as an entry point and downsizing option.
NAR says it will continue working with Fannie Mae and Freddie Mac to try to soften the impact, while keeping REALTORS® updated as more guidance becomes available.
Frequently Asked Questions
Did Fannie Mae and Freddie Mac eliminate limited condo reviews? Yes. As of spring 2026, the limited review process — which let well-qualified buyers skip some documentation — has been eliminated. All condo purchases now go through a full underwriting review.
Is it easier or harder to get a condo loan now? Both. Full reviews are now required for everyone, which adds documentation and time. But small HOAs (10 units or fewer) are exempt from full reviews, and the 50% cap on investor-owned units has been removed, which opens up financing for more buildings.
Why did HOA reserve requirements increase? The reserve requirement rose from 10% to 15% of the HOA’s budget (or the highest estimate from a reserve study) as part of the GSEs’ continued response to the 2021 Surfside condo collapse, which was linked to insufficient reserve funds for necessary structural repairs.
Will my HOA fees go up because of these changes? Possibly. If your HOA hasn’t already built up reserves to the new 15% threshold, it may need to raise dues or issue a special assessment to comply within the required timeline.
Can real estate agents access Fannie Mae’s condo approval database? Not directly. Fannie Mae’s Condominium Project Manager (CPM) database is restricted to HOAs and lenders. Agents can only access it if they are officially designated as an HOA’s representative — something NAR has advocated to change.
When did these condo lending rule changes take effect? The changes were implemented in spring 2026, building on temporary post-Surfside guidance that Fannie Mae and Freddie Mac had used since 2021–2022.
Summary
Condo lending rules are shifting fast in 2026, and the changes cut both ways for South Florida buyers and owners. Fannie Mae and Freddie Mac have scrapped the “limited review” shortcut, meaning every condo purchase now requires a full underwriting review — but they’ve also made it easier to finance small buildings and those with heavy investor ownership. The bigger concern locally is the jump in required HOA reserves from 10% to 15%, which could mean higher monthly dues or special assessments for South Florida condo owners already dealing with rising insurance costs. Navigating these changes takes local expertise. Contact Natasha at Live South Florida Realty, Inc. today for guidance on how these new condo lending rules could affect your next purchase, sale, or HOA — and for all your real estate needs across South Florida.
