Reference, updated August 2026
The condo review rules after August 3, 2026
Written for community association managers who now field these questionnaires every week. It sets out what changed, the three dates that decide which rules a file lives under, and the five answers that come back from underwriting most often.
Informational only. This page describes published requirements that Fannie Mae and Freddie Mac apply to lenders. It is general information, it is not legal advice or statutory interpretation, and it is not a substitute for the current published agency text, which is listed at the foot of this page.
What changed
Fannie Mae and Freddie Mac retired their light-touch condo review paths, Limited Review and Streamlined Review, for all mortgage applications dated on or after August 3, 2026. The change was announced on March 18, 2026 in Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C.
Unless a loan qualifies for a narrow waiver, every conventional condo loan in a building of 11 or more units now goes through Full Review. In practice that means the complete project questionnaire on every file, every time, rather than the short form that used to carry most transactions.
The three dates
Each of these turns on the application date of the loan, not the closing date and not the date the questionnaire is completed. Which regime a file sits in is the first thing to establish, because it decides every threshold below.
| Application date | What changes | What it means in practice |
|---|---|---|
| July 1, 2026 | Per-unit deductible on the master policy capped at $50,000 | A per-unit deductible above the cap has to be cured, typically through the borrower's own HO-6 policy |
| August 3, 2026 | Limited Review and Streamlined Review retired | Full Review on essentially every conventional condo loan in a building of 11 or more units |
| January 4, 2027 | Replacement reserve floor rises from 10% to 15% of assessment income | Budgets that clear underwriting today can fail in January on the same numbers |
The January date is the one worth raising with boards now, because a budget adopted this autumn is the budget that will be tested in the new year.
What Full Review asks of the association
- The complete project questionnaire, including the safety addendum added after Surfside: inspections, deferred maintenance, evacuation orders.
- The budget, with the replacement reserve line visible. At least 10% of assessment income now, and 15% for applications dated on or after January 4, 2027. The alternative is a reserve study less than three years old, funded at its highest recommended allocation. Baseline funding is no longer accepted under the current rules.
- Delinquency counted in units, not dollars. No more than 15% of total units 60 or more days past due, counting regular and special assessments alike.
- Insurance answered with specifics. Carriers and their ratings, evidence of 100% replacement cost, and every deductible stated exactly as the declarations page states it. Fidelity or crime coverage applies to projects of 21 or more units.
- Litigation and special assessments disclosed and classified, consistent with the minutes and with any engineer's report.
- Project character. Non-residential space is measured by square footage against a 35% limit, and hotel-type services rather than any rental percentage are what make a project a condotel.
- Condition. Critical repairs, evacuation orders, failed inspections and large unfunded repairs due within the year make a project ineligible until the work is remediated, not merely until it is funded.
What still avoids Full Review
The waiver paths are narrow: planned unit developments, detached condo units, projects of 10 or fewer units that are not part of a master association, and certain refinances. A waived review is not a clean bill of health on its own, because a project flagged as ineligible in Fannie Mae's project database is still ineligible.
Why the answers now travel further than one closing
Lenders certify every project in Fannie Mae's Condo Project Manager system, and must hold an unexpired certification for the project. A project recorded there as unavailable is ineligible, with no lender override available.
That is the shift worth understanding. Wrong delinquency arithmetic, a vague insurance answer, or a special assessment described in words that do not match the minutes no longer just delays one file. It can attach to the building, and every future sale in that building inherits it. A review also has a shelf life: roughly a year for an established project, shorter for a new one, so the same answers get re-examined on a schedule.
The five answers that come back most often
Not because managers are careless, but because the form's wording and the underwriter's arithmetic are not the same thing.
1. The reserve percentage, computed on the wrong denominator
The tested figure is the budgeted replacement reserve allocation divided by budgeted assessment income. The denominator leaves out special assessment income, income already allocated to reserves, incidental income and pass-through utilities such as bulk cable. A board can pass its own arithmetic on the total budget and still fail the lender's.
2. Delinquency counted in dollars, or on the wrong clock
The test counts units 60 or more days past due against total units, including special assessment instalments. Dollar-based ratios, 30-day buckets, and units whose delinquent party no longer owns the unit are the four ways the number comes out wrong.
3. Insurance summarized rather than transcribed
Each deductible needs its peril, its basis and how it applies, exactly as the declarations page states it. A percentage with no base, a calendar-year hurricane deductible described as per occurrence, or a buy-back layer reported without the underlying master deductible will all come back.
4. Litigation answered as a bare yes or no
The form asks a yes or no question, but the classification lives in the attachment. Listing every routine collection action manufactures a flag on a clean building; omitting a defect suit is the far more expensive error. Freddie Mac expressly extends the question to mediation and arbitration, so the safe practice is to answer to the wider wording.
5. A special assessment whose stated purpose does not match the minutes
If the minutes say spalling remediation per the engineer's report, the questionnaire cannot say maintenance. The lender pulls the minutes. A mismatch does not just fail the file, it creates a written record of an inconsistent answer. The same applies to an assessment that is under discussion but not yet adopted, which is a disclosure, not a no.
The habit that prevents most of this: every material answer names the document it came from and the date of that document, arithmetic answers show numerator, denominator and threshold, and anything the records do not support is answered as not maintained rather than estimated.
Where Fannie and Freddie diverge
The two rulebooks use the same words for different numbers more often than is comfortable, and a questionnaire is usually completed without knowing which one the file will land in.
| Item | Fannie Mae | Freddie Mac |
|---|---|---|
| Established project threshold | 90% of units conveyed | 75% of units conveyed |
| Single entity ownership, 21 or more units | 20% of units | 25%, with exclusions and a purchase cure path |
| Dispute processes | Litigation focus | Mediation and arbitration expressly included |
| Commercial parking | Counts toward the 35% limit | Excluded from the 35% limit, capped against budgeted income |
| Project review status system | Condo Project Manager | Condo Project Advisor |
Small projects of 5 to 20 units carry a flat two-unit single entity limit rather than a percentage.
What good handling looks like
Every answer sourced to a document and dated. Arithmetic shown, not asserted. Litigation disclosed and then classified, never a bare yes or no. Insurance transcribed from the declarations page, never summarized. Answers that match the minutes, the budget and the engineer's report, because all three will be read alongside the questionnaire.
That standard is achievable in house with care. It is also what a production desk does under your brand: documents in, a signature-ready package back in 24 to 48 hours, your manager reviews and signs, your fee stays yours.
Where these rules come from
Everything on this page traces to agency documents rather than industry commentary. The primary sources are:
- Fannie Mae Lender Letter LL-2026-03, issued March 18, 2026
- Freddie Mac Bulletin 2026-C, issued March 18, 2026
- Fannie Mae Selling Guide, Part B4-2, project standards, and Parts B7-3 and B7-4, insurance requirements
- Freddie Mac Single-Family Seller/Servicer Guide, Chapter 5701
- Fannie Mae Condo Project Manager and its Frequently Asked Questions, July 2026
- Fannie Mae Form 1076 and Freddie Mac Form 476, with Addendum 1076A and 476A
Agency requirements change. Check the current published text before relying on any figure here, and treat this page as a starting point rather than an authority.
Or hand the form to a production desk
Averbrook produces completed questionnaire packages from the association's own documents, human reviewed, returned in 24 to 48 hours under your brand. The first one is free.