Fannie Mae and Freddie Mac rolled out coordinated condo policy updates on March 18, 2026, the biggest change to condo mortgage underwriting in a decade. Two deadlines are already changing how condo sales close in South Florida, so it pays to understand them before you sign a contract.
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How We Got Here: Lessons from Surfside
The June 24, 2021 collapse of Champlain Towers South in Surfside took 98 lives and set off regulatory changes that are still unfolding. It revealed years of deferred maintenance masked by outdated inspection rules, reserve funds too thin to pay for critical repairs, code processes that let known structural problems linger, and insurance underwriting that lagged behind aging buildings. Regulators, building officials, insurers and the Government-Sponsored Enterprises all had to rethink their standards, and the March 18, 2026 updates came directly out of that review.
Ineligible Buildings: Why the Stakes Are High
When Fannie Mae's Condo Project Manager marks a building ineligible, no unit in that building can get a conventional mortgage, which affects every owner. A building can be flagged when:
- Critical repair costs exceed $10,000 per unit with no reserve funding allocated
- 15% or more of units are 60 or more days delinquent on assessments
- Insurance falls below GSE minimums
- Unresolved litigation exists
In practice, a building is not flagged the day its roof fails. It is flagged when a lender uncovers an unfunded repair bill.
Coming January 4, 2027: Higher Reserve Requirements
For conventional loan applications dated January 4, 2027 or later, associations must allocate at least 15% of budgeted assessment income to reserves, up from 10%. Associations below that level will need to raise contributions, which will likely mean higher monthly dues. A professional reserve study can be used instead, but the baseline funding method that let reserve balances drift toward zero is no longer allowed. Boards that set their 2026 and early 2027 budgets before this guidance have little time to adjust.
Good News for Investor-Heavy Buildings
As of March 18, 2026, the 50% cap on investor-owned units is gone. Buildings where more than half the units were investor-owned used to be non-warrantable and largely limited to cash buyers. Many urban and mixed-use buildings in South Florida can now be financed conventionally again. Individual lenders may still add their own requirements, so check with your lender before counting on eligibility.
Already in Effect August 3, 2026: Full Review for Most Condos
For years, buyers putting more money down could get a condo loan without anyone reviewing the association's finances. That option ended on August 3, 2026. Every conventional condo loan in a project with more than 10 units now requires a Full Review, no matter the down payment. A Full Review looks at:
- Association finances and reserve funding
- Structural condition and deferred maintenance
- Insurance adequacy
- HOA delinquency rates
The Small-Building Exception
Buildings with 10 or fewer units may qualify for a Waiver of Project Review if they are not part of a master association, carry proper insurance and are not flagged ineligible. For most Florida condo buildings, Full Review is now the only route to conventional financing.
Your Action Plan
- Buyers: request a current condo questionnaire before you make an offer, check reserve levels and any pending special assessments, and confirm your lender is underwriting to the new Full Review standard.
- Sellers: find out whether your building is warrantable before you list. Warrantable buildings keep the full pool of conventional buyers.
- Owners and boards: compare reserve funding with the 15% threshold, confirm insurance meets the $50,000 per-unit deductible cap, and watch delinquencies, since 15% triggers ineligibility.
Quick Answers
What does warrantable mean? A warrantable condo meets Fannie Mae and Freddie Mac standards, so buyers can use conventional financing. Non-warrantable buildings usually require cash or specialty loans.
Does a bigger down payment still avoid a project review? Not anymore. Since August 3, 2026, conventional loans in buildings with more than 10 units require a Full Review regardless of down payment.
These rules are already shaping deals. To talk through a specific building or situation, call (561) 632-7705 or email slevine@ipre.com.
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