Buying a condo has always been a little different from buying a single-family home.
Your lender is looking at your income, credit, down payment, and debt.
They’re also looking at the condo project itself.
And as of this year, that review has changed.
Fannie Mae and Freddie Mac announced several updates to condo financing rules in March, with some of the biggest changes took effect on August 3, 2026. Another important change is coming in January.
If you’re considering a condo in Southwest Colorado, especially in a mountain or resort community, these are worth knowing about before you write an offer.
The “Shortcut” Review Is Gone
Until August, some buyers could qualify for what Fannie Mae called a Limited Review and Freddie Mac called a Streamlined Review.
It meant the lender didn’t have to dig as deeply into every part of the HOA’s finances and operations.
That option has now been retired for new applications.
For most established condo projects that don’t qualify for a waiver or exemption, lenders will need a fuller project review. Fannie Mae says projects that previously qualified for Limited Review must now go through Full Review or, where eligible, a Waiver of Project Review.
That means your lender may be looking at things like:
- The HOA budget and reserves
- Master insurance
- Delinquent HOA dues
- Special assessments
- Deferred maintenance
- Pending litigation
The newsletter that brought this to my attention made a really practical point: get the HOA documents early. Waiting until you’re close to closing leaves less room to deal with a problem if the lender finds one.
The Reserve Requirement Is Getting Higher
This is probably the change I’d pay the most attention to.
Right now, the standard Full Review requirement generally calls for at least 10% of the HOA’s annual budgeted assessment income to be allocated toward replacement reserves.
Starting with Full Review loan applications dated January 4, 2027 or later, that minimum goes to 15%.
That may sound like an HOA accounting issue, but it can eventually become a buyer issue.
Reserves are the money an association sets aside for future work — roofs, siding, roads, common areas, major repairs, and other expenses that don’t happen every month.
If a building isn’t setting aside enough money, the HOA may need to increase dues, levy a special assessment, or make other changes to meet the financing requirements.
And if the project can’t satisfy the lender’s standards, financing can become much harder.
Reserve Studies Are Getting More Scrutiny Too
Some associations use a reserve study to show how much money they should be setting aside and when major expenses are likely to come up.
As of August 3, if a lender is relying on a reserve study to satisfy the requirement, Fannie Mae says the HOA budget has to fund the highest recommended reserve allocation in that study.
The old “baseline funding” method — where reserves could essentially fall close to zero without going negative — can no longer be used for this purpose.
So when I’m looking at a condo with a buyer now, I’d want to know:
Does this HOA have a recent reserve study, and is the association actually following it?
That tells you a lot more than the monthly HOA fee by itself.
There Is Some Good News for Mountain Markets
One change could make financing easier for certain condo projects with a lot of investment properties.
Fannie Mae retired its old 50% investment-property concentration limit for investor loans in established projects going through Full Review. Freddie Mac made a corresponding change.
That could matter in mountain and resort communities where second homes, investment units, and short-term rentals are more common.
There are still other project rules that have to be met, so this does not mean every rental-heavy condo suddenly qualifies.
Condotel characteristics, insurance problems, critical repairs, litigation, and other project issues can still affect eligibility. Fannie Mae specifically lists condotel characteristics and short-term rentals among common reasons a project may be flagged as ineligible.
Still, removing that particular concentration cap opens the door for some projects that previously had a much harder time qualifying.
Smaller Condo Projects Got a Break Too
Fannie Mae also expanded its Waiver of Project Review to certain condo projects with 10 units or fewer.
For projects with five to ten units, there are additional requirements, including that the project cannot be part of a larger master association or development.
That could be useful in areas where smaller condo developments are common.
Again, the property still needs to satisfy applicable insurance and other eligibility requirements.
Four Questions I’d Ask Before Writing an Offer
The lender newsletter included a checklist I really liked because it gets right to the issues that can hold up a condo loan.
Before getting too far into a condo purchase, I’d want answers to these questions:
- How much of the HOA budget is going into reserves?
- Is there a recent reserve study, and is the HOA funding it properly?
- What does the master insurance policy look like, including the deductible?
- Are there any special assessments, lawsuits, major repairs, or deferred maintenance?
I’d also ask the lender early whether they’ve reviewed the project before.
The earlier you know there’s an issue, the more options you have.
Why This Matters in Southwest Colorado
Condos can make a lot of sense here.
They can work well for someone who wants less exterior maintenance, a second home, a place they can lock up and leave, or a property closer to town and amenities.
But when you buy a condo, you’re buying into more than your individual unit.
The financial condition of the HOA, the insurance covering the building, upcoming repairs, and even the makeup of the project can affect whether a lender is willing to finance the purchase.
With these new rules, those details deserve attention earlier in the process.
The Bottom Line
If you’re thinking about buying a condo, don’t wait until the week before closing to find out whether the building works for your loan.
Ask about the HOA finances, reserves, insurance, assessments, and project eligibility early.
A great condo can still become a difficult transaction if the project itself doesn’t meet the lender’s requirements.
If you’re considering a condo in Southwest Colorado, I’m happy to help you know what questions to ask before you write an offer.
