Why Can’t a Buyer Get a Loan on My Condo?

If your building has eleven or more units, the short answer is that the shortcut your buyer’s lender used to take doesn’t exist anymore. As of August 3, the lender has to read your association’s budget, its reserves and its insurance before anybody gets a conventional loan in your building. That’s a longer look than most established buildings have had to sit through in years.

I sat down with the Fannie Mae letter itself this morning rather than the trade write-ups about it, because this one gets flattened into “condo lending got harder in Florida.” That’s true and it’s useless. The specifics are what tell you whether it’s your building.

What Changed on August 3?

Fannie Mae retired something called Limited Review.

Limited Review was the short version of condo project approval. For an established building, a lender could get a loan through on a thin look at the project instead of an audit of it. Loan applications dated on or after August 3, 2026, don’t have that option. Established projects that used to run through Limited Review now go through Full Review, or through a Waiver of Project Review where the building qualifies for one.

Two things about that date. It’s the application date, not the closing date. And Fannie Mae let lenders start early, so some may have been applying it well before August.

Does My Building Have to Go Through This?

Depends on how many units you have.

Fannie Mae widened the waiver at the same time it retired Limited Review. New and established projects with ten or fewer units can now qualify for a Waiver of Project Review. For a building of five to ten units there’s a condition attached: it can’t be part of a master association or a larger development.

So the practical line is eleven. Ten units or fewer and there’s a lane around the whole thing. Eleven or more and your building gets read.

The waiver isn’t automatic either. The project can’t be sitting at “Unavailable” status in Fannie Mae’s own project database, and it still has to meet the insurance requirements.

What Is a Lender Actually Reading in a Full Review?

Your budget and your reserves, and that’s where Florida buildings tend to run into it.

If your buyer’s loan officer comes back and says the building is “non-warrantable,” that’s the word for a project that doesn’t clear these rules. It isn’t a comment on the buyer. Their credit and their income can be perfect and it changes nothing, because the thing that failed was your association’s paperwork.

Fannie Mae tightened the reserve rules on the same August 3 date. When a lender leans on a reserve study to show a building has enough set aside, the association’s budget has to include the highest recommended reserve number in that study. Not a middle option, not the cheapest one that technically works.

The baseline funding method is out too. That’s the approach that lets the reserve balance drift down toward zero as long as it never actually goes below it. It’s an accepted way to fund reserves and Fannie Mae won’t take it anymore.

Is the Reserve Increase in Effect Now?

No, and this one is getting reported wrong all over the place.

The minimum reserve allocation for capital expenditures and deferred maintenance goes from 10 percent to 15 percent of the annual budgeted income assessment. That’s real and it’s coming. It applies under Full Review for loan applications dated on or after January 4, 2027.

That’s next year. Not the January that just went by, and not today. If somebody tells you your association is out of compliance right now on the 15 percent number, they’re a few months early.

Worth knowing the flip side of that. Almost every explainer you’ll find on condo reserves still quotes 10 percent, and for the moment those are right. That number has been the standard long enough that it’s baked into a lot of what’s written about this, and most of it hasn’t caught up to the January 4 date yet.

Will My Buyer Need Their Own Insurance Policy Now?

Possibly, and it’s a cost worth knowing about before it turns up at a closing table.

Fannie Mae capped the master policy deductible at $50,000 per unit for applications dated on or after July 1, 2026. That one already happened. Alongside it, where the master policy carries a per-unit deductible, the buyer has to hold an individual unit owners policy, and it has to cover at least the amount of that deductible.

Where an association runs a high per-unit deductible to hold the master premium down, that decision now lands on the buyer’s own policy. Their lender is going to check it.

Why Does an Assessment Turn Into a Financing Problem?

Because it’s the same building on both ends of it, and Fannie Mae wrote that chain down itself.

The letter says condo projects with inadequate reserves “typically do not have the requisite resources to maintain the physical condition of the project or to fund unexpected operating expenses.” Then owners “can experience substantial financial hardship from unexpected special assessments or higher regular assessments or dues, leading to mortgage default or foreclosure.”

Read that as one household sliding, not two separate groups of people. The reserves are thin. The roof still has to get done. The assessment goes out. Somebody who can’t cover it starts thinking about selling. And the building that produced the assessment is the same building that now has to survive a Full Review before that person’s buyer can get financed.

The thing that pushed them toward the door is standing in the doorway.

Does This Hit FHA and VA Buyers Too?

No. This is a Fannie Mae letter and it governs conventional financing.

FHA and VA run their own condo approval systems with their own rules, and nothing in this letter touches either one. If your building is FHA approved, that status isn’t affected by any of this.

Cash is the other one. A cash buyer doesn’t go through project review at all, because project review is the lender’s requirement and there’s no lender. That’s the whole reason a cash offer can close on a building where a financed one falls apart.

Did Anything Get Easier?

Two things, and both matter if you’re in a Florida building.

Fannie Mae dropped the requirement that new or newly converted Florida projects with attached units be submitted to PERS, its own project eligibility review service. Those can now be reviewed under the regular lender-delegated Full Review, same as anywhere else. It also retired the 50 percent investment property concentration limit in established projects reviewed under Full Review on investor loans. The 50 percent presale requirement on new and newly converted projects is still in place.

There’s one line in the letter worth reading out loud if you’ve been living with Florida’s condo carve-out. Retiring Limited Review, Fannie Mae says, “effectively retires the remaining geographic restrictions that apply to the state of Florida.” Florida had been treated as its own category on condo lending. It isn’t anymore. Same standard as everywhere else now, and the standard went up.

What Can I Look At Myself?

The two documents a lender is going to read, and you’re entitled to both.

The association’s current budget, and the reserve study if there is one. That’s what a Full Review turns on. The reserve line in the budget set against what the study recommends is close to the whole question, and you can ask the association for both without a lender or an agent involved.

What I can’t tell you is whether your specific building clears it. That’s a call an underwriter makes on your association’s actual paperwork and it goes different ways. What I can lay out is what a sale looks like with a building on the wrong side of a Full Review, what the other paths do, and what each one costs you. Which one you pick is yours.

If your building’s reserve numbers are thin and you’re thinking about timing, January 4, 2027 is the date to have somewhere in your head. Not as a reason to hurry. Knowing it’s out there is just a different position than finding out about it halfway through a contract.

I work Jacksonville, Florida, and most of what crosses my desk is distressed property. My license is Florida only, so if you’re reading this from another state, a question like this one goes out through the SFR referral network to somebody licensed where you live.

If any of it’s useful, I’m easy to get hold of. JimArmstrong904@gmail.com, or (904) 671-4161 if you’d rather just talk it through.

Jim Armstrong, REALTOR, Momentum Realty, SFR (Short Sales and Foreclosure Resource) certified. This is general information, not legal, tax, or financial advice.

Momentum Realty is not associated with the government, and our service is not approved by the government or your lender.