Fannie Mae's New Condo Rules: What Changed in 2026 and What Boards Should Do Now

Fannie Mae and Freddie Mac changed how they approve condo buildings for mortgages in 2026. Since August 3, 2026, lenders must check the budget and reserves of almost every building. A building that saves too little must show a recent reserve study and pay the study's highest savings plan. From January 4, 2027, the minimum savings rises from 10% to 15% of the yearly budget.

Why Fannie Mae and Freddie Mac matter to your building

Fannie Mae and Freddie Mac buy mortgages from lenders. Before they buy a condo mortgage, the building itself has to pass their project review. If a building fails that review, most lenders will not offer a conventional loan for units in it. Buyers are then left with cash, a portfolio lender, or another loan program. Fewer buyers usually means a slower sale and a lower price for every owner in the building.

What changed on August 3, 2026

Lenders now check almost every building's finances. Before August 3, many established buildings went through Limited Review. Under Limited Review, the lender barely looked at the building's budget or reserves. Fannie Mae retired it, and Freddie Mac retired its Streamlined Review on the same date (Fannie Mae Lender Letter LL-2026-03, Freddie Mac Bulletin 2026-C). Now nearly every building goes through Full Review, where the lender checks the budget and the reserves. Buildings with 10 units or fewer can still skip it.

A building can pass the reserve check in two ways. The first way is the budget. At least 10% of the owners' yearly fees must go into reserves. The second way is a reserve study. If the budget saves less than 10%, the building can show a recent reserve study instead.

The study only counts if the budget pays its highest plan. A reserve study usually shows several savings plans. The baseline plan is the cheapest, and it lets savings fall close to zero before big repairs. The threshold plan keeps a safety cushion. The full funding plan is the safest and the most expensive. Many boards budget the cheapest plan to keep fees low. Since August 3, the lender only accepts the study if the budget pays the highest plan the study shows (Fannie Mae Project Standards FAQ). A special assessment cannot fill the gap.

The study has to be recent. Fannie Mae requires the study to be completed within three years of the lender's project approval. Freddie Mac requires it to be dated within 36 months. This age limit already existed. What changed is that far more buildings now depend on it.

What changes on January 4, 2027

For loan applications dated on or after January 4, 2027, the minimum reserve line rises from 10% to 15% of budgeted assessment income. Both agencies use the same date. Fannie Mae's Selling Guide will keep showing 10% until then, and the 15% rule sits in LL-2026-03 for now (announcement SEL-2026-07). The reserve study path stays open after January. A building below 15% can still qualify with a current study funded at its highest recommended level.

What counts as an acceptable reserve study

Fannie Mae's Selling Guide (section B4-2.2-01) requires the study to come from an independent third party with reserve study expertise. Its examples are a credentialed reserve study professional, a construction engineer, or a CPA who specializes in reserve studies. The study must cover every major common-area component, the condition and remaining useful life of each, repair and replacement cost estimates, the annual contributions needed including inflation, an analysis of the reserves already in the fund, and a suggested funding plan. It must also meet or exceed your state's reserve study law. Our guide to what a reserve study is explains each of these parts in plain language.

Freddie Mac goes one step further. Its Guide (section 5701.5) says the study must comment favorably on the building's age, remaining life, structural integrity, and plans to replace major components. That is an engineering judgment, not just a spreadsheet. A study prepared or reviewed by engineers is easier to defend when a lender reads it.

The rules that were already in place

These changes build on the rules Fannie Mae adopted after the Surfside collapse. Since September 18, 2023, a building that needs critical repairs has been ineligible until the work is done (SEL-2023-06). Fannie Mae's definition of critical repairs includes defects likely to cause a building element to fail within a year, mold or water intrusion, a failed mandatory structural inspection, and unfunded repairs over $10,000 per unit that are due within 12 months (Selling Guide B4-2.1-03).

Fannie Mae marks ineligible buildings as Unavailable in its project database. It does not publish that list. A dataset reported by the Wall Street Journal put it at about 5,175 buildings as of March 2025. A building on that list is a building where most buyers cannot get a conventional mortgage, which is how one unfunded repair can turn into a special assessment and a pricing problem at the same time.

Fannie Mae is not the only clock

Lender rules apply in every state at once, and state reserve laws are tightening too. More states and provinces now require a reserve study, a funding rule, or a disclosure to buyers. See the reserve study requirements by region guide for the rule that applies to your building.

What this means for owners and buyers

A building can look fine today and still fail project review the day a buyer applies. Nothing in the building changes. What changes is the paperwork the lender asks for. A missing study, a study more than three years old, or a budget below the study's highest recommendation can each stop a conventional mortgage. One stalled sale can then put pressure on prices for the whole building. Underfunded reserves and surprise special assessments come from the same planning gap, and these rules put a deadline on closing it.

What boards and property managers should do now

1. Find the date of your last reserve study. If it will be more than three years old by the time owners are likely to sell, plan an update now.
2. Check your reserve line as a share of the budget. If it is below 15%, your building will rely on the reserve study path from January 2027.
3. Check the funding method in your study. If it only shows baseline funding, ask your provider for threshold or full funding numbers, because lenders cannot accept baseline funding.
4. Budget the highest recommended contribution. If the study shows more than one funding level, the budget has to match the highest one.
5. Deal with critical repairs first. A building with unresolved critical repairs is ineligible no matter how well funded it is.
6. Co-op boards should check their own rules. Fannie Mae's co-op rules ask for adequate reserves but do not set a percentage test.

If your study needs an update, our guide to how much a reserve study costs covers what drives the price. Not sure where your building stands today? Upload your current study to our free Reserve Study Insights tool for a plain-language summary and your building's REcollab Score.

Frequently asked questions

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Sources: Fannie Mae Lender Letter LL-2026-03 (March 18, 2026); Fannie Mae SEL-2026-07 (August 5, 2026); Fannie Mae SEL-2023-06 (July 5, 2023); Fannie Mae Selling Guide B4-2.2-01, B4-2.1-03 and B4-2.3-02; Fannie Mae Project Standards FAQ (August 2026); Freddie Mac Bulletin 2026-C; Freddie Mac Guide 5701.5; Wall Street Journal reporting (Unavailable list count). This is general information, not legal or financial advice.

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