Industry update - Fannie Mae & Freddie Mac condo policy - for real estate & industry professionals
Will your condo still be financeable in 2027?
Conventional condo lending rules are changing through early 2027. Some loosened, but overall scrutiny increased significantly - and warrantability is what keeps a project sellable at full value. Here is what changes, when, and what to do now.
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Insurance changes
Roof ACV allowed, inflation guard removed, $50K max per-unit deductible, HO-6 required in more cases.
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Limited review eliminated
Full underwriting of HOA financials on every conventional condo loan. More docs, more scrutiny, more delays.
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15% reserves (was 10%)
A 50% increase in required annual reserve funding - based on budgeted allocation, not what's accumulated.
| Category | Before | After |
|---|---|---|
| Reserve contribution | 10% of budget | 15% of budget (eff Jan 1, 2027) |
| Review process | Limited review allowed | Eliminated - full review (eff Aug 3, 2026) |
| Reserve studies | Flexible funding methods | Highest level required; baseline not allowed |
| Investor concentration | 50% cap for investor purchases | Removed (eff now, established projects) |
| Small project waiver | 2-4 units | Expanded to 10 units |
| Roof coverage | Replacement cost required | Actual cash value allowed (eff Jul 1, 2026) |
| Inflation guard | Required | Removed |
| Per-unit deductibles | 5% and geographic specific | $50K max - owners should carry Loss Assessment Coverage |
Good news
- Investor concentration cap removed
- Roof coverage flexibility added (older roofs insurable)
- Insurance documentation options expanded
Challenges
- Higher reserves squeeze budgets (dues pressure, assessment risk)
- Full review on every deal - non-warrantable projects lose most buyers
- Coverage gaps kill deals; insurance still expensive
Agents
Pre-approve condo listings
Project pre-approval before listing protects price and timeline.
HOA boards
Budget the 15% this fall
2027 budgets plus master-policy review with your broker - now.
Managers
Prepare documentation
Full review means complete, current financial packages.
Owners
Talk to your board
Before fall budget season - warrantability protects resale value.
Full presentation, project pre-approvals & non-warrantable solutions
Scan for the complete industry briefing. Condo project approvals with a dedicated team, FHA spot approvals, HOA pre-approval for listing agents - and if a project is non-warrantable, expanded financing programs (owner/second/investor, full doc or alt income, individual or LLC).
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For real estate & industry professionals - not for consumer distribution.
Equal Housing Opportunity. All loans subject to underwriting approval; certain restrictions apply.
Based on Fannie Mae / Freddie Mac condo project and insurance updates announced 2026; guidelines are
subject to change - verify current requirements per transaction. Not legal, tax, or insurance advice.
CrossCountry Mortgage, LLC (Company NMLS #3029) and Patrick L Norman (NMLS #303097) are licensed to conduct
mortgage business in Virginia, Maryland, and the District of Columbia (www.nmlsconsumeraccess.org).
© 2026 Patrick L Norman. All rights reserved.