Condo financing changes on August 3, 2026
Fannie Mae and Freddie Mac overhauled how condo buildings qualify for conventional financing.
But it’s not all bad news.
Yes, some buildings got harder to finance but at the same time, some just got easier. We explain in detail what actually changed, when, and how to find out where your building stands.
Andes Mortgage · NMLS #2187991
Licensed in GA, FL, TX, SC, AL
Mortgage pros since 2013
- THE SHORT VERSION
Fannie Mae and Freddie Mac retired the streamlined “Limited Review” shortcut resulting in the biggest condo financing change that happened on August 3rd. Limited review was a system used by the agencies to approve a condo without a full financial deep dive of the project. For applications dated on or after August 3, 2026, most established condo projects now need a deeper Full Review of the association’s reserves, insurance and litigation — or a project-review waiver.
But the same update loosened other rules: for example, the old 50% investor-concentration cap is gone, smaller projects got an easier waiver path, and several insurance requirements were relaxed. So a building that couldn’t get conventional financing last year might qualify now — and vice versa. The only way to know is to review the specific project.
Some projects got easier to finance, others became more difficult. Here are the biggest condo financing changes on August 3rd.
The rule change tightened some standards and relaxed others. Here’s the honest breakdown.
Easier for some buildings
The 50% investor-cap is retired
Established projects with lots of rentals were often non-warrantable. That specific cap is gone — some of those buildings can now qualify for conventional financing
Smaller projects have an easier path
The waiver of project review now covers projects with up to 10 units (was 4), reducing friction on small buildings.
Insurance rules relaxed
Inflation-guard coverage is no longer required, roof coverage rules eased, and master-policy deductibles are capped at $50,000 per unit.
Florida's Project Eligibility Review Service (PERS) retired
New Florida attached projects no longer have to go through Fannie Mae's PERS — they use the standard lender review.Effective now
Tighter rules
The Limited Review process is gone
Established projects now need a Full Review of the HOA's finances, reserves, insurance and litigation — or a waiver.
Stricter reserve studies
If a project relies on a reserve study, it must fund to the highest recommended level. The old “baseline” funding method no longer counts.
Higher reserve funding minimum
Required reserve allocation rises from 10% to 15% of the annual budget
When the changes come into effect
The condo financing changes don’t all land at once — they phase in by loan application date.
March 18, 2026: Rules announced
Fannie Mae issued Lender Letter LL-2026-03 and Freddie Mac issued a matching bulletin. The investor-cap removal, small-project waiver and most insurance changes could be used immediately.
July 1, 2026: Insurance deductible cap
The $50,000-per-unit master-policy deductible cap becomes mandatory. Where a master policy carries a per-unit deductible, the unit owner must carry their own HO-6 policy.
August 3, 2026: Limited Review is retired
The big one. For applications dated on or after this date, Limited Review is gone and the stricter reserve-study rules apply. This is the change most buyers will feel.
January 4, 2027: 15% reserve minimum
The higher reserve-funding requirement takes effect for Full Review projects, giving associations time to adjust their budgets.
How do the new condo financing changes and rules affect you
Exact terms depend on the program, the project and your file. These are general ranges, not a commitment to lend.
Ask about the building’s finances before you fall in love with a unit. A project that looks perfect can still fail a Full Review. A quick pre-screen tells you before you write an offer.
Your loan may now need fuller HOA documentation, which can add time. Get your lender the condo questionnaire, budget and insurance early so it doesn’t stall your closing.
If your building can’t pass a Full Review, your buyer pool shrinks to cash and non-conventional financing. Knowing where your project stands protects your resale value.
The building can kill a deal even when the buyer is perfect. Vet the project’s warrantability up front — or send it to us for a fast second review before you accept an offer.
The retired investor-concentration cap is good news — some rental-heavy buildings that were off-limits may now qualify. Others will lean on DSCR or portfolio financing instead.
If a project fails conventional review, non-QM and portfolio programs use their own project rules — often a path forward when Fannie and Freddie say no.
The new condo financing changes are for conventional loans only
Lender Letter LL-2026-03 governs Fannie Mae and Freddie Mac (conventional) financing. FHA and VA condo approval are separate systems and aren’t changed by this update — a building that fails conventional review may still work on an FHA-approved or VA-approved project.
And non-QM and portfolio lenders don’t use Limited or Full Review at all — they apply their own project guidelines. That’s often the way to finance a building that no longer fits the conventional box. It’s exactly what we do.
Send us the condo listing or buyer for a second review. We’ll tell you fast whether it’s saveable.
This summary is based on Fannie Mae Lender Letter LL-2026-03 (issued March 18, 2026) and the coordinated Freddie Mac bulletin, along with Fannie Mae’s updated Selling Guide. Effective dates and requirements are described in general terms; the exact review outcome for any project depends on the specific building, program and lender. This page is educational and is not a commitment to lend or a guarantee of financing.
Last verified: August 2026 · Guidelines subject to change without notice
Marcos Zambrano
President, Andes Mortgage · MLO NMLS #988935 · Mortgage professional since 2013
Condo financing changes for 2026 FAQs
Do all condos need a full review now?
No — that’s a common misconception. Limited Review is retired for established projects, but small projects of 10 or fewer units can often use a waiver of project review, and some transactions still qualify for other exemptions. More buildings will face a full review than before, but not every condo does.
What was a Limited Review for a condo?
It was a streamlined approval path that let lower-risk transactions — typically larger down payments — skip the deep financial review of the HOA. It’s now retired, so those projects go through the Full Review process instead.
Is my building still warrantable?
It depends on the project’s reserves, insurance, litigation and ownership mix under the new Full Review standards. Some buildings that were non-warrantable are now easier to finance because the investor-concentration cap was removed; others may struggle with the stricter reserve rules. A free pre-screen is the fastest way to find out.
Does this change affect FHA and VA eligible condos?
No. This update applies to conventional (Fannie Mae and Freddie Mac) financing. FHA and VA approve condo projects through their own separate systems, so a building that struggles with conventional review may still work with an FHA-approved or VA-approved project.
What if my building can't pass the new review?
You still have options. Non-QM and portfolio lenders use their own project guidelines instead of Fannie or Freddie’s, which often makes a non-warrantable building financeable. That’s our specialty — send us the project and we’ll find the path if there is one.
When exactly are these changes coming into effect?
The insurance deductible cap became mandatory July 1, 2026, Limited Review retirement and the stricter reserve-study rules on August 3, 2026, and the higher 15% reserve minimum on January 4, 2027. The investor-cap removal and small-project waiver were available immediately when the rule was announced in March 2026.
Let's find out if your condo can close
Start with the Mortgage Match™ and we’ll route you to the right condo program — or send us the building for a free pre-screen.
Andes Mortgage LLC · NMLS #2187991 · Marcos Zambrano MLO NMLS #988935. Licensed for consumer lending in Georgia, Florida, Texas, South Carolina and Alabama. Business-purpose (DSCR) lending available in additional states.
This page is for informational purposes only and is not a commitment to lend, an offer of credit, or a guarantee of any rate, term or program. Loan approval, loan-to-value limits, credit-score minimums, reserve requirements and condo-project eligibility are subject to full underwriting, current lender and agency guidelines, and verification of the specific project. Rates and programs are subject to change without notice. Equal Housing Lender.