Condo Loans in 2026: What Actually Changed on August 3 — and the 15% Everybody Put on the Wrong Calendar
If you own a condo, or you're trying to buy one, your feed probably lit up in the last week or so. The rules for how condo buildings get reviewed changed, and a chunk of it kicked in on August 3, 2026.
Most of what I've read about it is half right. So let me just quote the actual letter.
Everything below comes out of Fannie Mae's Lender Letter LL-2026-03, published March 18, 2026. It's nine pages, it's public, and it says these updates are "in alignment with Freddie Mac and in coordination with U.S. Federal Housing (FHFA)." Six changes. Not all of them tightened. Not all of them started in August.
What actually changed on August 3
Two things.
Limited Review is gone. That was the shortcut — a buyer putting down a big chunk in an established building could skate through with a light look at the project. Fannie's words: "Established projects previously eligible for Limited Review must now be reviewed using the Full Review process or, when applicable, the Waiver of Project Review process." Lenders "must do so for all loan applications dated on or after Aug. 3, 2026."
Practical translation: your loan is now partly about a building you don't control. Budget, reserves, insurance, delinquencies, special assessments, litigation, deferred maintenance. Your credit score can be immaculate and the file can still stall on an HOA that's slow returning a questionnaire.
And a quieter one nobody's covering. On the same date, lenders lost the "baseline funding method" on reserve studies — the approach that let a reserve balance drift toward zero without ever quite touching it. If your building leans on a reserve study, the budget now has to fund, in Fannie's words, "the highest recommended reserve allocation amount in the reserve study."
That second one is small print, and it's the one I'd actually check on.
The 15% everybody put on the wrong calendar
Here's the correction worth the whole article.
Nearly every headline I found ties the jump in condo reserves — from 10% to 15% of what the HOA budgets to collect in dues each year — to the August change. Same paragraph, same breath.
That's not what the letter says. Fannie's effective line on the reserve increase reads: "Lenders must comply with this requirement when utilizing the Full Review process for all loan applications dated on or after Jan. 4, 2027."
January. Not August. And it keys to your application date, not your closing date — which means it's an actual planning lever, not trivia. If your building is sitting at 12% and the board is working toward the fix, the calendar is a real thing you can aim at.
There's also an out most summaries skip: a current reserve study, done within the last three years by an independent qualified professional, can be used instead — as long as the budget funds that study's highest recommended number.
Two changes that went the other way — and have been live since March
This is the part that got buried, because "rules got stricter" is the easier story to write.
The investor concentration limit is gone. Fannie retired "the investment property concentration limit of 50% in established projects reviewed as part of the Full Review option on investor loans." Effective immediately — meaning March, not August. Buildings that were unfinanceable for an investor purely because too many units were rentals aren't automatically stuck anymore. (The separate 50% presale requirement on new and newly converted projects still applies. Different rule, still standing.)
And project review can be waived on buildings up to ten units, new or established — up from four. For a five-to-ten-unit building, it can't be part of a master association or a larger development, and the other waiver conditions in the Selling Guide still apply. But that's a whole class of small Austin infill buildings that just got easier, not harder.
Nobody sent out a press release about the good half.
The insurance one that already hit on July 1
Separate track, already in effect, and this is the one that surprises people at the closing table.
The maximum per-unit deductible on a building's master policy is now $50,000 per unit. And if the master policy carries a per-unit deductible at all, you as the buyer are required to carry your own unit-owner policy — with coverage at least equal to that deductible. Your own policy's deductible caps at the greater of 5% of its coverage amount or $2,500.
Fannie also loosened things here: roofs still have to be insured, but no longer on a replacement-cost basis, and the inflation-guard requirement on project master policies is retired.
If you're shopping condos right now, the master policy's per-unit deductible belongs on your question list. It's a real number that shows up in your monthly cost, and almost nobody asks about it before they're under contract.
What I'd actually do about any of this
Three questions, asked before you write an offer, not after:
- What percentage of annual assessment income does the budget put into reserves — and is there a reserve study, and how old is it?
- Does the master policy have a per-unit deductible, and what is it?
- Any special assessments, litigation, or deferred maintenance on the books?
Your realtor can usually get all three from the HOA in a couple of days. I can read them the same afternoon and tell you whether the building clears or where it snags.
If the building doesn't clear
Then agency financing isn't the door, and that's genuinely all it means.
It doesn't mean the condo is a bad buy, and it doesn't mean you're out. Conventional financing is one set of rules written by two companies. There are loans that don't ask those questions at all — that's a real conversation, and it depends on your file and the building. Call me and we'll look at it.
What I won't do is tell you a building is fine when it isn't. If the reserves are thin and there's a roof coming, that's your money, and you should hear it from me before you hear it from a special assessment.
When a condo is the wrong answer
Sometimes it is. If you're planning to be out in two or three years, project risk you can't control is a bad trade. If the HOA is disorganized enough that nobody can produce a budget, that's information about how the building gets run, not just about your loan. And if the dues plus the assessment history push your real monthly cost past a small house in Leander or Manor, buy the house.
For context on the market you're buying in: Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed at 6.69% the week of August 6, 2026. I'm not going to quote you a rate in a blog post — nobody honest can — but that's the water everyone's swimming in right now.
I'm a mortgage banker, not your HOA's attorney or your insurance agent. For the legal and coverage questions inside your association, use those people. For whether the building finances, that one's mine.
Frequently Asked Questions
Did condo mortgage rules really change on August 3, 2026?
Yes, two of them. Fannie Mae retired the Limited Review process, so established condo projects that used to qualify for the shortcut now go through a Full Review or, where eligible, a Waiver of Project Review. Lenders had to apply this to all loan applications dated on or after August 3, 2026. On the same date, lenders also lost the "baseline funding method" option on reserve studies. Source: Fannie Mae Lender Letter LL-2026-03, March 18, 2026.
Do condo reserves have to be at 15% now?
Not yet. Fannie Mae is raising the replacement reserve allocation from a minimum of 10% to a minimum of 15% of annual budgeted assessment income, but its own effective date reads "for all loan applications dated on or after Jan. 4, 2027." Many articles attach the 15% to the August date. It keys to your application date, so a building working toward the number has a real window.
What is a non-warrantable condo?
It's a building that doesn't meet Fannie Mae or Freddie Mac project standards — usually because of reserves, insurance, litigation, deferred maintenance, delinquent dues, or commercial space. Conventional financing won't go there. It's a statement about the building's paperwork, not about whether the condo is a good place to live, and it isn't necessarily permanent.
Can I still get a loan if my building doesn't qualify?
Often, yes — through financing that isn't sold to Fannie or Freddie and doesn't apply their project rules. Whether it fits depends on your file and the specific building, so it's a phone call rather than a blog answer. Call me at (512) 577-8898 and I'll tell you straight.
Did anything get easier for condo buyers in 2026?
Two things, and they've been live since March. Fannie retired the 50% investment-property concentration limit for established projects under Full Review on investor loans, and it expanded the Waiver of Project Review to new and established projects with ten or fewer units, up from four. Small buildings and investor-heavy buildings both got room.
What's the $50,000 condo insurance rule?
Effective for loan applications dated on or after July 1, 2026, the maximum allowable per-unit deductible on a project's master property insurance policy is $50,000 per unit. If the master policy has a per-unit deductible, you're required to carry your own unit-owner policy with coverage at least equal to that deductible — worth asking about before you're under contract.
Buying a condo in Austin, Cedar Park, Leander, Round Rock, or anywhere else in Texas, and want to know whether the building clears before you write the offer? Send me the HOA budget and the insurance page and I'll read them.
Call or text me at (512) 577-8898, email [email protected], or start at www.ccm.com/Stephen-Steakley.
If you — or a friend or family member — ever have a mortgage question, I'm right up the road.
Stephen Steakley · Regional Branch Manager, CrossCountry Mortgage, LLC (NMLS #3029) · NMLS #274124 · 1464 E Whitestone Blvd, Suite 1603, Cedar Park, TX 78613 · Equal Housing Lender. This article summarizes publicly published Fannie Mae policy as of August 10, 2026 and is for general information only; it is not legal, insurance, or tax advice, and program guidelines change. Not affiliated with or endorsed by Fannie Mae, Freddie Mac, the Federal Housing Finance Agency, or any government agency.
