[NEWS] How will Fannie Mae's 2026 Condo Rules affect you (Bigger Reserves, Tougher Reviews, Higher Assessments)?

HOATalkNews (Other)
Posts: 3

Posted:

Anyone have views on this or want to share how it may affect your community?

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On March 18, 2026, Fannie Mae issued Lender Letter LL-2026-03, changing whether buyers in a condominium can get a conventional mortgage. A building's eligibility affects how easily units sell and what they're worth, so boards should note four changes:

Reserves (Jan. 4, 2027): minimum reserve funding rises from 10% to 15% of annual assessment income — which Hirzel Law says "will likely require many associations to increase assessments." Alternatively, fund to the highest level in a reserve study; baseline funding is no longer accepted.

Reviews (Aug. 3, 2026): the "Limited Review" process is retired, so many established condos now face a Full Review of reserves, insurance, and finances.

Insurance (July 1, 2026): master policies must cover 100% of replacement cost, with the deductible capped at $50,000 per unit.

Investors (now): the 50% investor-concentration cap is dropped for established condos under Full Review (single-investor and new-construction limits remain).

Hirzel Law advises getting a reserve study and budgeting accordingly "rather than waiting until a sale is delayed."

Sources: Fannie Mae Lender Letter LL-2026-03, Hirzel Law analysis, and a client alert from Whiteford, Taylor & Preston.

For general information only; not legal, financial, or professional advice. See our Terms.

BryonW (Massachusetts)
Posts: 69

Posted:

Generally supportive of these changes. Especially the minimum reserve funding requirements. When there are stubborn homeowners/board members who want to under-fund, it is nice to point to an outside legal requirement and say "we can't reduce the reserve funding because it would violate Fannie Mae guidelines." These people seem to respond better to outside authority than to reason, logic, and spreadsheets...