The Condo Rules Just Changed.

Here's How to Use That to Close More Deals.

If you work with buyers or sellers on condos, what happened on August 3rd affects every deal you're working right now, and every one you'll take on for the next year. Most agents in your market have no idea this changed. That's your opening.

This guide exists for one reason. I want you closing more condo deals, with fewer surprises, and looking like the person in the room who actually knows what's going on. Not the agent who finds out financing fell apart three weeks into escrow. The one who saw it coming and already had a plan.

Read this once, and you'll know more about condo financing than most loan officers your clients have talked to.

Condo building exterior with balconies and modern architecture

Read this first

These Rules Apply to Conventional Financing, Not Every Condo Loan

Before going further, one distinction matters. The August 3 changes, the end of Limited and Streamlined Review, and the full-project checklist below are specific to conventional financing, loans built to sell to Fannie Mae or Freddie Mac. That's where most owner-occupant buyers land, and where the new friction shows up. It is not the only way to finance a condo.

Agents often say a building "won't finance" the moment conventional review fails. Most of the time, that just means the agency path is closed, not that the deal is dead. Different loan types run on different rulebooks. Knowing which one your buyer actually needs is how you keep a contract alive when conventional says no.

Conventional (Fannie Mae / Freddie Mac)

This is what the rest of this guide covers in depth. Agency-backed loans now require a full condo project review on most buildings over 10 units. Reserves, insurance, litigation, owner-occupancy, and warrantability all matter here.

FHA

FHA does not use the Fannie/Freddie full-review process. HUD maintains its own condo project approval system. A building can be FHA-approved, pending, or not approved at all, and that status lives on HUD's list, not the GSE checklist in this guide. Always verify FHA condo approval on the specific building before assuming FHA will work.

VA

VA loans run on their own condo approval framework through the Department of Veterans Affairs, not Fannie or Freddie. A project must be VA-approved, or pursuing approval, for a VA buyer to close. Confirm project approval early rather than assuming it because the buyer is eligible.

Non-QM options

Non-QM loans are funded by private capital and aren't sold to Fannie Mae or Freddie Mac, so they aren't bound to the same agency eligibility matrix. Bank-statement, asset-based, and other non-QM programs can sometimes finance condos that stall under conventional review, with different credit, documentation, and rate tradeoffs.

Non-warrantable condo lenders

Some buildings are simply non-warrantable for agency delivery, high investor concentration, litigation, condo-hotel characteristics, or other overlays Fannie/Freddie won't buy. Dedicated non-warrantable lenders exist specifically for those projects. Rates and down payments run higher, but the financing can still close.

Everything that follows is your conventional playbook, the rules most deals hit first. Match the loan type to the buyer and the building before assuming financing is dead on any given deal.

Why Condos Are About to Matter More to Your Business

Here's the shift happening in a lot of markets right now. Single-family home prices have kept climbing while inventory sits near historic lows in plenty of metros, and a growing share of buyers who used to want a house are getting priced out or outbid every time they try. Condos are where a lot of them land instead. Lower price point, often the only realistic entry into a neighborhood they actually want to live in.

That means the buyer pool for condos is growing in a lot of markets, at the exact moment financing on condos just got harder. Which means the agents who understand how to navigate that gap are going to close deals the agents who don't will lose. If a buyer walks into your open house priced out of single-family and asking about the condo market, you want to be the agent who already knows what building they can and can't get financed on before they fall in love with the wrong one.

Contemporary apartment complex with landscaped courtyard and balconies

Why Financing Got Harder in the First Place

In June 2021, Champlain Towers South, a twelve-story condo building in Surfside, Florida, partially collapsed in the middle of the night with no warning. Ninety-eight people died. Investigators later found the HOA had been sitting on known structural problems for years. Cracked concrete, corroded rebar, a below-market reserve fund that couldn't cover the repairs the building actually needed. The board knew. They kept dues low instead of fixing it.

That single event rewrote how Fannie Mae and Freddie Mac think about condo risk. Both agencies started requiring lenders to dig much deeper into an HOA's financial health, insurance coverage, and structural condition before they'd buy a loan on a unit in that building. And on August 3, 2026, they went further. Fannie Mae eliminated its Limited Review process. Freddie Mac eliminated Streamlined Review. Those were the fast-track paths that let a buyer with a strong down payment skip a deep dive into the HOA's books. That option is gone now for most buildings with more than 10 units. Every buyer, regardless of down payment, is going through a full review.

For you, that means the easy condo deal you used to be able to close in three weeks might now take five or six, and might not close at all if the building has problems nobody bothered to check for until now.

What Full Review Actually Looks At

Real estate agent discussing property details with client using a clipboard indoors

This is the part most agents skip past, and it's exactly the part that'll make you look sharp in front of a client. When a lender does a full review on a condo project, they're pulling and evaluating:

The HOA's budget and reserve study.

Lenders want to see the association has adequately funded reserves for major repairs, not just enough to cover landscaping and the pool guy. A reserve study that's outdated or shows the HOA underfunding known repairs can sink the loan even if your buyer has perfect credit.

Insurance coverage.

Master policy limits, deductibles, and whether the coverage actually matches the replacement cost of the building. Underinsured buildings, the exact problem that contributed to Surfside, get flagged.

Structural and litigation history.

Any known deferred maintenance, unresolved structural findings, or pending litigation against the HOA. If the building has an open lawsuit over a leaky roof nobody fixed, that's now something your buyer's lender will find and act on.

Owner-occupancy and delinquency ratios.

How many units are owner-occupied versus investor-owned, and how many owners are behind on HOA dues. High delinquency signals a building that might not have the reserves it claims to.

Any one of these can knock a project into ineligible territory. And here's the part that should really get your attention: Fannie Mae and Freddie Mac keep a list of condo projects they simply won't lend on. That list isn't published anywhere a buyer or agent can check ahead of time. Which means the first time anyone finds out a building is on it is usually after your buyer is already in contract, already paid for an inspection, and already emotionally committed.

One of my first loans after getting licensed was for a family buying a condo in Kansas City for their daughter, who was starting college nearby. Conventional pre-approval, a unit they liked, under contract, everything looked routine. About three weeks in, underwriting came back and the building was on Fannie Mae's unavailable list, deferred maintenance and unresolved parking garage structural issues that had never been addressed. We had to walk away from the deal. It took the family about three months to find another unit near campus that would actually clear. That's the scenario this guide is built to help you avoid.

Buy Side

If You're Representing the Buyer

Your job right now is to get ahead of financing risk before your buyer ever writes an offer, not after. Here's exactly how to do that.

1
Pull HOA documents before you show the unit, not after an offer is accepted. Ask the listing agent for the HOA budget, most recent reserve study, and current insurance declarations page as early as possible. If the listing agent doesn't have them or can't get them quickly, that's information too.
2
Loop in your buyer's loan officer before your buyer picks a favorite. A quick eligibility check on a specific building takes a lender minutes if they know what to look for. Get that answer before your buyer is emotionally attached to a unit that might not qualify.
3
Ask the direct questions yourself, in writing. Is there any pending litigation against the HOA. Any special assessments in the last three years or planned in the next one. Any known structural findings. Getting these answers in writing protects you and gives your buyer real information instead of a guess.
4
Build real time into your financing contingency. Full review documentation on a slow-moving HOA can take weeks longer than a typical single-family loan. Set that expectation with your buyer at the offer stage, not two weeks before the scheduled close when they're already anxious.
5
Know your fallback before you need it. If a building doesn't pass conventional review, non-warrantable condo loan programs exist specifically for that situation. Know which lenders on your radar actually offer this so you have an answer ready instead of telling your buyer the deal is dead.

List Side

If You're Representing the Seller

This is where you protect your listing from falling apart in escrow, and where you can genuinely add value the listing agent down the street isn't providing.

1
Push the HOA to have documentation ready before you go live. Reserve study, current budget, insurance declarations. If the board or management company is slow, start that request the day you take the listing, not after you're already under contract with a buyer waiting.
2
Get ahead of anything you know about. Deferred maintenance, a pending assessment, an open claim. Full review will surface it regardless, so disclosing it upfront and framing it honestly protects you far more than hoping it doesn't come up.
3
Set realistic timeline expectations with your seller. A buyer using conventional financing may need more time under contract than your seller remembers from their last sale. Price that into how you talk about the timeline from day one.
4
Keep a short list of lenders who do non-warrantable condo financing. If the building has any issue that could affect eligibility, having that answer ready keeps your buyer pool wider instead of losing buyers who assume they can't get financed.

Got Investor Clients?

Everything above is about conventional financing, loans built to sell to Fannie Mae or Freddie Mac. Those project reviews, reserve tests, and owner-occupancy ratios apply when your buyer needs an agency-backed loan. If your client is buying the condo as an investment, there's a different path that doesn't run through that same rulebook.

It's called a DSCR loan, short for Debt Service Coverage Ratio. Instead of qualifying the borrower on personal W-2 income and DTI the way a conventional loan does, the lender underwrites the property's expected rental income against the proposed mortgage payment. When the rent covers the debt service at the lender's required ratio, your investor can often qualify without the full personal-income package conventional underwriting demands.

Why that matters after August 3: DSCR loans are typically funded by private and non-QM capital. They're not sold to Fannie or Freddie, so they're not chained to the Limited Review or Full Review framework those agencies just tightened. A building that fails conventional review, high investor concentration, thin reserves, pending litigation, or a warrantability problem, can often still close on DSCR because those lenders use their own condo guidelines, not the GSE matrix.

What DSCR actually skirts

Conventional condo eligibility is built around Fannie and Freddie buying the loan. DSCR doesn't need that exit, which is how investor clients can still finance units in buildings that are non-warrantable or would stall under a full agency review, as long as the rental numbers and the lender's own condo overlays clear.

Who it's for, and who it isn't

DSCR is an investment-property product. Primary-residence buyers still need conventional, FHA, VA, or similar occupancy-based financing, and they still face the full-review rules in this guide. Use DSCR when your client is buying to rent and the deal dies on project eligibility rather than on the borrower's credit or down payment.

Tradeoffs to set up front

Plan on larger down payments and higher rates than a comparable conventional investment loan. Lenders still check condo insurance, HOA docs, and their own overlays, just not the Fannie/Freddie checklist. Pre-screen the building with a lender who actually closes DSCR condo loans before your investor writes an offer.

If an investor tells you a condo won't finance, don't bury the deal on a conventional no. Ask whether DSCR is on the table.

The Bigger Picture

Every agent working condos right now is dealing with the same rule change. Most of them don't know it happened yet, or they know vaguely and haven't looked at what it actually requires. The ones who do the reading, ask the right questions upfront, and have real answers when a deal gets complicated are the ones clients remember and refer. That's the whole point of this guide. Not to make you a mortgage expert. To make sure financing never blindsides a deal you worked hard to get.

Not Sure if Your Listing is Fannie/Freddie Approved?

Send me the address. I'll dig into warrantability and tell you straight what I find — the same check I wish every agent partner ran before anyone got attached to a unit.

Matt Moghaddam

Have a Specific Deal in Front of You Right Now?

I'm Matt Moghaddam, a California-licensed mortgage broker with access to 240+ wholesale lenders, including programs built for condos that don't meet standard Fannie Mae or Freddie Mac guidelines. If you've got a building you're not sure about, or a deal where financing is the question mark, send it my way and I'll give you a straight answer, fast.

Contact Matt Mo