The Condo Is Only Part of the Purchase
What the 2026 condo-financing changes mean for buyers—and why the community behind the unit matters, too.
Updated August 10, 2026
You can love the kitchen, the light, the view, and the fact that someone else may be responsible for cutting the grass. All perfectly reasonable things to love.
But when you buy a condominium, you are not only buying the space you will call home. You are also buying into the financial health, insurance coverage, maintenance decisions, rules, and responsibilities of the condominium community behind it.
That has always mattered. As of August 2026, it may become part of the financing conversation earlier and more often.
What changed on August 3, 2026?
Fannie Mae retired its Limited Review process for condominium projects, and Freddie Mac retired its comparable Streamlined Review process for applicable conventional loan applications received on or after August 3, 2026.
Those review options allowed certain established condominium projects to qualify through a narrower review. Now, when a project does not qualify for an available waiver or exemption, the lender will generally need to complete a fuller project review.
That review is separate from evaluating the buyer.
A buyer may have strong credit, sufficient income, and a solid down payment—and the lender may still need to determine whether the condominium project meets the requirements of the buyer’s loan program.
Depending on the property and financing, that can involve reviewing:
The association’s operating budget
Financial statements
Reserve funding
Insurance coverage
Significant repairs or deferred maintenance
Special assessments
Pending litigation
Delinquent association dues
Condominium questionnaires and governing documents
The practical takeaway is not that every condominium suddenly became difficult to finance. It is that the community behind the unit may receive more attention before the lender can approve the property.
Fannie Mae’s current project standards make an important distinction: the lender reviews the borrower, the individual unit, and the condominium project. All three pieces may matter.
There is some good news for smaller condominium communities
The 2026 changes are not universally more restrictive.
Fannie Mae expanded its Waiver of Project Review, and Freddie Mac expanded its comparable Exempt from Review option, to include qualifying condominium projects with as many as 10 units.
For projects containing five to 10 units, additional conditions apply. For example, the project generally cannot be part of a larger development or master association, and other basic eligibility and insurance requirements still have to be satisfied.
That may help some smaller or boutique condominium communities that previously faced a more extensive review.
This is why broad statements such as “condo financing is harder now” miss the point. The answer depends on the community, the loan, the lender, and the review path available for that particular property.
Why reserves are receiving more attention
A reserve study is essentially a long-range plan for the expensive parts of a community that will eventually need repair or replacement.
Roofs do not last forever. Neither do elevators, siding, parking areas, balconies, plumbing systems, or community amenities. A reserve study helps estimate when those projects may arise, what they may cost, and how the association plans to fund them.
Effective with applicable loan applications dated on or after August 3, Fannie Mae changed the requirements for lenders relying on a reserve study to demonstrate that a project has sufficient reserves. The association’s budget must reflect the highest recommended reserve allocation identified in the study, and the baseline funding method—which allowed reserve balances to approach zero without falling below it—may no longer be used for this purpose.
A separate change is scheduled for January 4, 2027. For applicable Fannie Mae full reviews, the standard minimum allocation for replacement reserves will increase from 10% to 15% of annual budgeted assessment income.
That does not mean every association must keep exactly the same percentage in reserves. The applicable review method, reserve study, community budget, and lender requirements all matter.
It does mean the question is no longer simply:
“How much money is in the reserve account?”
The better questions include:
What major components will need attention?
When are those projects expected?
What funding does the reserve study recommend?
Is the association following that recommendation?
Are owners likely to face higher dues, a special assessment, or borrowed community funds to complete the work?
Virginia law already requires condominium associations, subject to their governing documents, to conduct a reserve study at least once every five years and review it annually. The association may address repair and replacement needs through reserves, additional assessments, or borrowed funds. That is why the reserve study and the association’s actual budget belong in the same conversation. (Virginia Code § 55.1-1965)
The monthly fee affects more than your checking account
Association dues are not simply an expense to consider after deciding how much home you can afford.
For conventional financing, required association dues are generally included in the monthly housing expense used by the lender to evaluate the borrower’s debt-to-income ratio. (Fannie Mae Selling Guide B3-6-03)
That means two homes with the same purchase price may create two different financing pictures if one carries a substantial monthly association fee.
But the number alone does not tell us whether the fee represents good value.
A higher fee could include services or expenses such as:
Water or sewer
Trash service
Landscaping
Exterior maintenance
Master insurance
Common-area utilities
Amenities
Contributions toward future repairs
Another community may have a lower fee while leaving more expenses and maintenance responsibilities with the individual owner.
The useful comparison is not simply low fee versus high fee. It is:
What does the fee replace, what will I still pay separately, and does the complete monthly picture work for me?
That is a much better conversation than choosing the lowest fee and hoping it tells the whole story.
Maintenance can be shared. It does not disappear.
One attraction of condominium ownership is the possibility of having fewer exterior maintenance responsibilities.
If the roof is a common element, the association may coordinate its eventual repair or replacement. That can be very appealing to someone who does not want to spend Saturday mornings collecting contractor estimates.
But the roof still has to be paid for.
Owners fund the association through regular dues, reserve contributions, and—when necessary—special assessments or other community financing. The responsibility may be shared and managed collectively, but the underlying expense is still part of ownership.
The important question is not merely, “Does the association handle the roof?”
It is:
Who is responsible for it, how is the work funded, and is the community financially prepared when the time comes?
Insurance deserves its own conversation
A condominium typically has a master insurance policy covering certain community property and common elements. The individual owner may also need a separate unit-owner policy, often called an HO-6 policy.
Where one policy stops and the other begins depends on the master policy, governing documents, deductibles, and the coverage needed for the individual unit and its improvements.
Fannie Mae’s 2026 guidance also revised certain insurance requirements. Among other provisions, an individual unit-owner policy may be required when portions of the unit or its improvements are not covered by the master policy or when the master policy carries a per-unit deductible.
That is not a reason to panic or attempt to interpret the master policy alone at the kitchen table. It is a reason to involve a qualified insurance professional early enough to answer questions such as:
What does the master policy cover?
What is the association’s deductible?
Could part of that deductible become the owner’s responsibility?
What interior finishes or improvements need separate coverage?
What coverage should the owner carry for personal property, liability, loss assessment, and temporary living expenses?
The association, lender, and insurance professional may each be looking at different pieces of the same puzzle. The goal is to make sure those pieces actually connect.
A townhouse and a condominium are not opposites
This is one of the most common points of confusion.
Townhouse usually describes how a home is built: an attached, multi-level residence that shares one or more walls with neighboring homes.
Condominium describes how ownership is structured.
A townhouse-style property may therefore be:
A condominium, where the owner holds title to the unit and shares an interest in common elements; or
Fee-simple property, where the owner typically owns the structure and land associated with it, possibly within an HOA.
The exterior may look almost identical. The ownership, maintenance responsibilities, insurance, association documents, and financing requirements may be quite different.
Never assume the form of ownership from the architectural style alone. The legal documents and property records tell that story.
The Virginia resale certificate carries much of the fine print
For a resale property in a Virginia common-interest community, the seller or seller’s agent generally must obtain the resale certificate from the association and provide it to the purchaser or purchaser’s agent.
The certificate and its supporting documents can include:
Current assessments and other fees
Approved special assessments
Planned capital expenditures
Reserve balances
The current operating budget
The reserve study or a summary
Pending litigation or judgments
Association insurance information
Recent board and association meeting minutes
Parking, rental, occupancy, and other community restrictions
Known violations involving the unit or community
That is not decorative paperwork.
It can reveal decisions and obligations that affect the buyer’s monthly cost, financing, insurance, maintenance responsibilities, and future use of the property. (Virginia Code § 55.1-2310)
The documents deserve careful review by the buyer and, when appropriate, the buyer’s lender, attorney, insurance professional, or other qualified adviser.
Questions worth asking before an offer
A buyer does not need to become a condominium underwriter or association manager. The goal is to get the right questions to the right people while there is still time to use the answers.
I would want to ask:
Will my loan require a condominium-project review?
Ask the lender early. Requirements vary by loan program, lender, property, occupancy, and project.What will the lender need from the association?
Confirm who will request the documents and whether the association or management company charges fees for providing them.What does the monthly association fee cover?
Compare included services with the expenses the owner will still pay separately.What belongs to the owner, and what belongs to the association?
Pay particular attention to roofs, windows, doors, balconies, plumbing, exterior components, and limited common elements.Are major repairs or special assessments underway or being discussed?
Meeting minutes may be just as revealing as the formal budget.Does the reserve study match the association’s financial plan?
A study is useful. A study that the community is actively following is more useful.What does the master insurance policy cover?
Have an insurance professional help determine the individual coverage needed for the unit.Do the community rules fit the way I intend to live?
Parking, pets, rentals, renovations, amenities, and use restrictions can matter just as much as the floor plan.
It is still about fit, not formula
A condominium can be an excellent choice for someone who wants shared amenities, less exterior maintenance, or a home that fits a busy schedule.
A detached home may be the better choice for someone who values greater individual control and is comfortable carrying the full responsibility for maintenance.
A fee-simple townhouse may offer some of both.
There is no universal winner.
The right answer is the property where the ownership structure, complete monthly cost, maintenance responsibilities, financing, and lifestyle make sense together.
My role is not to replace the lender, attorney, association manager, or insurance professional. It is to help my clients recognize which questions belong on the table—and make sure we ask them before they are mentally arranging the furniture.
A note about financing
This article discusses general condominium considerations and certain 2026 Fannie Mae and Freddie Mac conventional-financing changes. FHA, VA, and other loan programs have separate requirements, and individual lenders may apply additional standards. This information is educational and is not legal, lending, tax, insurance, or financial advice.
