New Fannie Mae Condo Rules: What They Mean for Your Listings and Closings

Buying a condo yourself? Read the homebuyer version of this guide — same rule changes, written around qualifying for your own purchase.

If you list or sell condos, co-ops, or PUD units, Fannie Mae's Lender Letter LL-2026-03 changes your pre-listing checklist more than it changes anyone's loan terms. Part of it is already in effect and the rest phases in through January 2027. I work enough condo files to know where deals now stall, so this is organized around your workflow: before you list, when you have an offer, and the conversation to have with a board.

Before you list: collect three documents

Since August 3, 2026 the streamlined Limited Review is retired, so nearly every established project your buyer finances goes through a Full Review. The lender will need, from the association:

• the current HOA budget
• the most recent reserve study
• the master insurance certificate, plus litigation disclosures

Requesting these when you take the listing, rather than when a lender asks three weeks before closing, is the difference between a normal file and a scramble. Self-managed and older buildings are the slowest to respond, so start there.

One thing worth putting in your remarks: associations of 10 units or fewer that are not part of a larger master association can qualify for the expanded Waiver of Project Review — a lighter, faster documentation path. In a small standalone building, that is a genuine selling point for financed buyers.

When you have an accepted offer

Loop the buyer's lender in the day the offer is accepted and ask for two things: that the project be run through Fannie Mae's Condo Project Manager (CPM) immediately, and that any Full Review concern be flagged before the financing contingency expires. A project problem found in week one is usually workable. The same problem found at the underwriting deadline is how condo deals die.

Also flag the insurance change for your buyer early: since July 1, 2026 a master policy can carry a per-unit deductible up to $50,000, which means an HO-6 walls-in policy on the buyer's side. It belongs in the affordability conversation during the option period, not at the closing table. Separately, two March 18, 2026 changes eased requirements — roofs no longer need replacement-cost coverage and the mandatory inflation guard on master policies was dropped.

The board conversation about reserves

The change most likely to blindside a deal is the reserve floor: from January 4, 2027, projects going through Full Review need replacement reserves funded at 15% of assessment income, up from 10%. Underfunded associations may raise dues or pass a special assessment to comply.

If you have relationships on a board — especially in older or self-managed buildings — the useful ask is whether the reserve study meets the new threshold and whether the board is discussing an assessment. A board that hears this from you in a calm conversation handles it better than one that learns about it as a financing objection three weeks before someone's closing.

How to advise each side

Listing side: documents before marketing; disclose a known assessment discussion rather than letting it surface in underwriting; in a small building, say so in the remarks.

Buy side: set expectations that project review adds days if the HOA is slow; ask for the reserve study inside the inspection period; budget for HO-6 coverage.

Either side: nothing here restricts condo lending. It moves the paperwork earlier. We still close most condo files on our usual 21-day timeline by requesting the HOA package on day one, though timelines vary by file and no closing date is guaranteed.

Common questions

What should I collect from an HOA before I list a condo?

The current budget, the most recent reserve study, the master insurance certificate, and litigation disclosures. Those are the documents a Full Review needs, and the association controls all four.

How do I know early whether a building will be a financing problem?

Ask the buyer's lender to run the project through Fannie Mae's Condo Project Manager as soon as the offer is accepted, ideally before the financing contingency is removed.

Does Limited Review retirement apply in every state?

Yes, nationwide, for applications dated August 3, 2026 and later. Florida had a related, separate transition on manual project review that also wrapped up by that date.

Should I tell sellers on a board about the reserve requirement change?

Yes, particularly in older or self-managed buildings. A possible special assessment is far easier to manage as a planning conversation than as a late financing objection.

Do co-ops and PUDs fall under the same letter?

Yes — condos, co-ops, and planned unit developments financed through Fannie Mae.

Is a small building really easier to finance now?

An association of 10 units or fewer that is not part of a larger master association may qualify for the Waiver of Project Review instead of a Full Review, which is a shorter documentation path. Eligibility is confirmed by the lender for the specific project.

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Partner with ABS Home Mortgage and we will check a building's project eligibility before your buyer is under a contract deadline — or share this with your buyers in the homebuyer version.

This summary reflects our reading of Fannie Mae Lender Letter LL-2026-03 as published; it is not exhaustive and does not replace Fannie Mae's official guide. Details are accurate as of September 2026 and subject to change. Project eligibility varies by building and is confirmed at the time of application. Rates, terms, and programs are subject to change without notice, and all loans are subject to credit approval.