Got Condo? This might impact you.

Condo owners and buyers: Fannie Mae and Freddie Mac just changed the rules, and your HOA dues may be going up

If you own a condo, are thinking about buying one, or sit on an HOA board, there’s a rule change coming that you need to know about now, not in 2027 when it hits.

On March 18, 2026, Fannie Mae and Freddie Mac announced that condo associations must set aside at least 15% of their annual budget for reserves, up from the current 10%. The new requirement applies to all conventional loan applications dated on or after January 4, 2027.

That may sound like an accounting detail for HOA board members to worry about. It isn’t. It affects what you pay every month, what your condo is worth, and whether the next buyer can even get a loan to purchase it.

Why Fannie and Freddie get to make this call

Fannie Mae and Freddie Mac don’t lend money directly. They buy mortgages from lenders after closing. Because lenders plan to sell most conventional loans to these two agencies, they only write loans that meet the agencies’ rules.

Here’s the part most condo owners don’t realize: Fannie and Freddie don’t just evaluate you as a borrower. They evaluate your entire condo complex. If the association’s finances don’t meet their standards, the complex becomes what lenders call “non-warrantable,” and conventional financing shuts off for every unit in the building. Not just yours. Everyone’s.

Buyers can still purchase in a non-warrantable complex, but they’re stuck with portfolio loans or other alternatives that usually mean bigger down payments, higher interest rates, and tougher qualifying. Fewer buyers can do that, and fewer buyers means lower prices.

What “reserves” are and why the number moved

Reserves are the association’s savings account for big-ticket repairs: roofs, parking lots, pools, siding, elevators. The old rule said at least 10% of the annual budget had to go into that account each year. The new rule says 15%.

Why the increase? The agencies looked at the data and found a direct link between underfunded reserves and the surprise special assessments that hit owners with sudden five-figure bills. The 2021 Surfside condo collapse in Florida, where years of documented deferred maintenance went unfunded, pushed this entire issue to the front burner. Fannie and Freddie decided they’d rather require bigger savings accounts up front than back loans in buildings that can’t afford their own repairs.

There is one way around the flat 15%: if the association has a professional reserve study completed or updated within the last three years and is funding at the highest level that study recommends, the 15% budget rule doesn’t apply. Minimum “baseline” funding no longer counts.

What this means if you own a condo

Expect your HOA dues to go up. Associations currently budgeting 10% to 14% for reserves have to close that gap, and the money comes from the owners. There’s no other source.

That stings, but consider the alternative. If your board keeps dues low and lets the complex fall below the new standard, your building loses conventional financing. When you go to sell, most of your buyer pool disappears overnight. A modest dues increase now is a far better outcome than a unit you can’t sell at market price later.

And here’s the point that gets lost in the complaints about higher dues: a well-funded association is a more desirable association. Buildings that skip maintenance to keep dues artificially low end up with worn roofs, cracked pavement, dated amenities, and eventually a special assessment anyway. Buyers notice. Deferred maintenance shows up in the sales price whether the rule change exists or not.

What this means if you’re buying a condo

Before you write an offer, ask for the association’s current budget and check the reserve line. Divide the annual reserve contribution by the total budget. If it’s under 15% and there’s no current reserve study funded at the recommended level, that complex may lose conventional financing in January 2027, right when you’d want to refinance or resell.

Also budget for the likelihood that dues in your target complex will rise. A condo with $350 monthly dues today may cost $400 or more once the association adjusts. Run your numbers on the higher figure.

One more change to know about: as of August 3, 2026, the agencies eliminated the streamlined “Limited Review” process for complexes with more than 10 units. Every condo purchase now goes through a full review of the association’s budget, reserves, insurance, delinquencies, and litigation. Deals in financially weak buildings will get caught, and they’ll get caught late in the transaction if nobody checked early.

What this means if you’re selling a condo

Your association’s financial health is now part of your listing, whether you like it or not. If your complex meets the new standards, that’s a genuine selling point: buyers get access to normal conventional financing, and your unit competes against a full buyer pool.

If your complex is below the threshold, get ahead of it. Talk to your board. Find out whether they have a plan to reach 15% or a current reserve study that satisfies the exception. If a sale is in your near future, timing matters. A unit listed before the association fixes its reserves faces a smaller, more expensive-to-finance buyer pool.

The bottom line

Higher reserve requirements mean higher dues in the short run for a lot of condo owners. Nobody enjoys that. But the alternative, an underfunded association that loses financing eligibility and defers maintenance until a giant special assessment lands, costs owners far more.

If you’re not sure where your complex stands, or you’re weighing a condo purchase and want the association’s finances reviewed before you commit, that’s exactly the kind of homework I do for my clients. Reach out and we’ll look at the numbers together before they become a problem.

Dave Kidder is a licensed Broker Associate with ERA Valley Wide Homes serving Central Californa, including Fresno, Clovis, Madera and Sanger California , with 24 years of licensing experience and more than 40 years as a real estate investor.