New Condo Lending Rules: What DMV Buyers, Sellers, and Owners Need to Know

New Condo Lending Rules: What DMV Buyers, Sellers, and Owners Need to Know

Two dates, one higher reserve standard, and a plan for each side of the transaction.

Fannie Mae and Freddie Mac help finance nearly half of all home purchases, so a change to their condo rules reaches almost every condo sale in the DMV. They changed those rules in March. Part of the change took effect on August 3, 2026. The part with the biggest financial effect takes effect on January 4, 2027.

If you came here from our mailer, this is the explanation behind our note about new condo regulations in 2027. It covers what changed, what it can cost, and what to do whether you are buying, selling, or already own a condo.

The Short Version

• Since August 3, 2026, every conventional loan in an established condo building with more than 10 units goes through a full lender review. The shortcut called Limited Review is gone.
• On January 4, 2027, the minimum an association must set aside for reserves rises from 10% to 15% of its annual budgeted assessment income.
• Buildings with 10 or fewer units can now qualify to skip project review.
• A building that falls short can lose conventional financing, which narrows the pool of buyers.

Why the Rules Changed

In June 2021, a condominium building in Surfside, Florida collapsed, and 98 people died. Investigations found that the building needed major repairs and did not have the reserves to pay for them. Fannie Mae and Freddie Mac responded with rules requiring engineering and structural studies, financial studies, and disclosures. Lenders must verify that these are in place.

The March 2026 update builds on those rules. According to the National Association of REALTORS®, rules that did not improve safety were relaxed and others were tightened. In its March letter, Fannie Mae said it remains focused on reducing the risk of underinsured and underfunded condo projects.

What Changed, and When

These are conventional loan rules. FHA, VA, and cash purchases follow different rules, so ask your lender which ones apply to you.

What a Full Review Looks At

A Full Review covers the association’s budget, reserve funding, insurance, pending litigation, and building maintenance. The lender collects the documents, and the association usually supplies them.

The first review takes the longest. According to the Mortgage Bankers Association, once a lender completes a Full Review, the project is in Fannie Mae’s systems as approved and the review is not needed for every loan. Associations can check their status in Fannie Mae’s Condo Status Finder. A building with no flagged issue there is not necessarily approved.

What It Can Cost: The Reserve Math

The reserve minimum is a share of what an association collects in regular assessments. If an association sets aside 10% today and has to reach 15% without cutting other spending, regular assessments rise by about 6%.

This is an illustration. It assumes the association reserves exactly 10% now and covers the gap through regular dues. Associations already above 15% may not need an increase, and associations that follow a reserve study may need more.

The federal agency that oversees Fannie Mae and Freddie Mac estimated dues increases of $15 to $30 per unit per month and said fewer than 10,000 associations would struggle with the new threshold, according to the National Association of Mortgage Brokers. That group disputes the estimates and has asked for a delay of at least 12 months. In a May 2026 survey by the Foundation for Community Association Research, 54% of responding condominium communities planned to raise regular assessments to meet the reserve requirements, and 14% planned special assessments.

NAR has said it shared its concerns about the larger reserves and the short transition time with Fannie Mae and Freddie Mac. Joel Berner, a senior economist at Realtor.com, said the rules may be worth the short-term pain if they push associations to maintain buildings sooner and avoid large special assessments.

If You Are Buying a Condo

• Ask for the association’s budget, reserve study, recent board minutes, insurance summary, and special assessment notices before you write an offer.
• Ask what share of assessment income goes to reserves, and whether the plan reaches 15% by January.
• Ask whether any special assessment is approved, proposed, or already being collected.
• Ask your lender early whether the building has passed a Full Review. A large down payment no longer keeps a loan out of this scrutiny.
• Plan for a slower closing. Build the lender’s review time into your contract dates.
• Look past the monthly fee. A low fee can hide thin reserves.
• Know the date that counts. The reserve standard follows the date of your loan application, so applications dated January 4, 2027 or later fall under the 15% rule.

If You Are Selling a Condo

• Ask your management company or board for the budget, reserve study, insurance summary, and special assessment notices before you list.
• Check how the building shows in Fannie Mae’s Condo Status Finder. The association can work with an approved lender to submit documents for approval.
• Answer the buyer’s lender quickly. The speed of the review depends on how fast the association supplies documents.
• Price with financing in mind. A building that has not met the new requirements can be harder to sell to buyers who need a conventional loan.
• Watch the application date. Buyers whose loans are dated January 4, 2027 or later face the 15% standard for your building.

If You Own a Condo

• Ask the board what share of assessment income goes to reserves and when the last reserve study was done.
• Ask whether the board plans a dues increase, a special assessment, or both. Berner expects dues to rise in many buildings as associations work toward the January 2027 deadline.
• Ask when the board will set next year’s budget, and attend that meeting.
• Check your own insurance. If the master policy carries a deductible of up to $50,000 per unit, you may need coverage for your share of it.
• Check your building’s status in Fannie Mae’s Condo Status Finder.

Documents to Request

What This Means in the DMV

A local Realtor writing in ARLnow called the small-building change a big deal for the D.C. market, where financing for buildings with 10 or fewer units got easier. The same column notes that some buildings set rental caps at or just below 50% because of the old investor rule, and some may drop those caps now that the limit is gone. It also argues that Northern Virginia buildings with strong reserves may have to raise fees more than they need to reach 15%. Associations in that position should talk with a lender about how the rules apply to them.

Ask us about a specific building before you make an offer or list.

Book a No-Hassle Consultation

Before you buy or list a condo, we can help you request the association’s documents and talk through what they show. We can connect you with lenders and other professionals we trust, and flag anything that could slow a loan.

Contact Us

Ready to talk? Use our contact form, or call or email any of us directly.

Reach us directly

• Scott Sachs: 301-908-4373, [email protected]
• Daniel Schuler: 301-651-1895, [email protected]
• Jesse Johnson: 240-446-2924, [email protected]
• Will Ferguson: 301-538-3841, [email protected]

The Synergy Group of Compass, 5471 Wisconsin Ave, Suite 300, Chevy Chase, MD 20815, SynergySoldIt.com

Disclosures and Sources

This post is general information. It is not legal, tax, or financial advice. Talk with your lender, your attorney, and your association about your situation.

Compass is a licensed real estate brokerage that abides by Equal Housing Opportunity laws. Information is compiled from sources deemed reliable but is not guaranteed. All measurements and square footages are approximate. This is not intended to solicit property already listed. Compass is licensed as Compass Real Estate in DC and as Compass in Virginia and Maryland.

Market and policy information is as of the dates shown and may change.

Sources:

• National Association of REALTORS®, Why and How Condo Lending Rules Are Changing, August 18, 2026
• National Association of REALTORS®, Changes in Condominium Underwriting Guidelines, March 23, 2026
• Fannie Mae, Lender Letter LL-2026-03, March 18, 2026
• The Close, Condo Reserve Rules Are Now in Effect, August 13, 2026
• Newsweek, Fannie and Freddie Tighten Condo Lending Rules, August 6, 2026
• National Association of Mortgage Brokers, Condo Financing
• ARLnow, Major changes to condo lending requirements and the implications, July 7, 2026