Posted by Big Condo Finance Changes alter the way buyers obtain a mortgage to purchase a condo. In short, The Limited Review Option for Fannie Mae and Freddie Mac condo financing is no longer an option. Now, all (except for a few exceptions) Conventional Loan condo transactions must go through a FULL CONDO REVIEW. Below is what every buyer and agent needs to know about this significant change.
Condo Financing Change – What’s Happening?
To understand the significance of this, you have to know the following: on a condo purchase or refinance, the entire HOA/condo project must obtain approval for buyers to finance a unit in that project. This is regardless of and separate from whether the buyer is approved for their home loan.
On August 3, 2026 Conventional Condo Financing (Fannie Mae and Freddie Mac) will get more complex. Lenders may no longer use the streamlined Limited Condo Review to approve an HOA/Condo project. Going forward on Conventional loans, every HOA/condo project is evaluated using the more rigorous Full Condo Review Process. This is regardless of occupancy and/or down payment. FHA financing still allows spot approvals and there are alternatives to Conventional financing (see below).
Prior to this change, specific down payment and occupancy scenarios allowed the more streamlined Limited Condo Review process. The Limited Review analyzed a fraction of the data Full Condo Reviews look at. This made it simpler for Condo project financing approval via the Limited Review. Going forward, only Full Reviews are allowed.
Why Limited Condo Reviews Are Going Away
First, one reason Limited Reviews are gone is related to the now infamous Surfside condo concerns. These Florida condo’s collapsed killing 8 people in 2021 due to structural flaws. Putting HOA/condo’s through a Full Review on every Conventional loan sniffs out some of these shortcomings whereas a limited review would not.
Also, Fannie Mae and Freddie Mac want a deeper review of the HOA/condo projects financial status. This includes HOA budgets, condo blanket insurance, HOA level litigation and HOA lates. Limited reviews skip much of this data. Over time, ignoring this info led to condo’s foreclosing. This has been a problem for mortgage lenders, Fannie Mae and Freddie Mac. Full Reviews look into all of the info mentioned above. Additionally, they require certain metrics and standards be met. Fannie and Freddie hope this curtails much of the fallout seen with Limited Reviews.
What Does This Mean For Buyers?
These condo financing changes impact buyers and sellers in a few ways. There are other mortgage options besides Conventional (Fannie Mae/Freddie Mac) that may be used to finance a condo (see below). First, here are 3 key changes for buyers and sellers related to the Conventional condo financing changes:
- Some condo projects will not be eligible for financing under a Full Review that would have passed a Limited Review
- Due to the additional information required for a Full Review, condo loans may take longer (HOA’s can be slow pokes – your lender needs to be a condo expert knowing how to move the process along)
- Buyers incur higher fees. The Full Review HOA document package costs more than the Limited Review package. Lenders require buyers pay for the packages up front. Each HOA charges a different amount for an HOA package. However, typical Full Review packages range between $250 and $400. This is slightly more than a Limited Review.
Other Condo Financing Options
Fear not, there are alternative condo financing options. If and when a condo project does not pass a Full Review for a Conventional loan other paths to secure a loan exist. Note – in some cases, the same thing that was an issue for a Full Review may be an issue for one of these other methods as well. Each has different requirements for condo financing eligibility:
- FHA Financing
- VA Financing
- Non QM Financing
- Non Warrantable condo options
- Fannie Mae PERS
- Freddie Mac Green-Par