A client texted me last week. She had been looking at a condo in Santa Monica for three months. Two offers fell through because the buildings had financing problems she did not know about. The third building looked clean, her offer was accepted, the appraisal came in fine. Then her lender came back with a question that has not really existed before in this form: how is the HOA preparing for the August 3 rule change.
She had no idea what they were talking about. Neither did the HOA management company when she forwarded the question. That is the situation a lot of LA condo buyers and sellers are walking into right now, and it is the situation this piece is meant to fix.
On March 18, 2026, Fannie Mae issued a lender letter changing its condominium project standards. The two dates that matter most are August 3, 2026, when Limited Review is retired for new loan applications, and January 4, 2027, when the minimum reserve allocation rises for Full Review loans. Other investors and lenders can have different requirements, so buyers need to verify the program being used.
This piece walks through what is changing, why, and what to do about it if you are buying or selling a condo anywhere from Long Beach up the coast to Malibu. I focus on Los Angeles because that is the market I work in and because each project needs to be evaluated on its actual records.
The two Fannie Mae dates that matter.
Fannie Mae’s lender letter sets two key effective dates:
Key effective dates
August 3, 2026: For Fannie Mae loans, Limited Review is retired for loan applications dated on or after this date. Established projects previously eligible for Limited Review must use Full Review or, where eligible, a Waiver of Project Review.
January 4, 2027: For Fannie Mae Full Review loans, the required reserve allocation increases from 10 percent to 15 percent of annual budgeted income.
Every transaction is program-specific. Fannie Mae’s changes do not automatically describe every conventional, portfolio, or government-insured loan. The lender must confirm the applicable review path.
August 3 is the date that changes the project review path under Fannie Mae’s policy. In practice, buyers and sellers should request HOA documents early and confirm that path before relying on an approval timeline.
What Limited Review was, and why losing it matters.
Fannie Mae historically allowed different review paths for established condo projects. Limited Review was a narrower project review available only when its eligibility requirements were met. Full Review is more comprehensive.
Full Review is a deeper analysis of project eligibility. Lenders obtain and evaluate the documentation required by the applicable investor and program. A project that does not meet those requirements may not be eligible for that financing path, though other financing options can have different rules.
For Fannie Mae loan applications dated on or after August 3, 2026, Limited Review is retired. Established projects that would have used it must follow Full Review or, where the project qualifies, a Waiver of Project Review. The waiver’s eligibility rules are specific, so small project size alone does not guarantee it.
For Los Angeles condo buyers and sellers, the practical impact is a greater need to request HOA documents early and confirm the review path before relying on an approval timeline. The documentation and timing depend on the project, lender, and investor.
What this means if you are buying a condo in LA.
A few realities you need to plan for:
Project eligibility issues may be identified more fully. That does not automatically end every financing path, but it makes early HOA documentation and lender review more important.
Documentation can affect the timeline. Full Review can require HOA financials, insurance information, reserve information, and records of repairs or litigation. Request those documents early. The time needed depends on the association, property, and lender.
Fannie Mae status is not a universal verdict. Condo Project Manager can show an Unavailable status or delivery restrictions for a project. That can affect Fannie Mae eligibility, but it is not a determination for every lender or loan type.
The program matters. A project’s eligibility can differ by investor and lender. If a building has a complex ownership, litigation, insurance, or reserve profile, ask the lender to identify the actual review path before you rely on an approval.
Individual lenders can still apply their own overlays. If you are considering a building with an unusual ownership, litigation, insurance, or reserve profile, ask the lender to confirm the program requirements before relying on an approval.
What this means if you own a condo and might sell.
If you own a condo in Los Angeles, financing eligibility can matter when you sell or refinance. Here is the practical framework:
Financing eligibility can affect the buyer pool. If a project is not eligible for a buyer’s preferred loan program, that buyer may need another financing option. The price impact is property-specific and should not be assumed from a single percentage.
If you are on an HOA board, start with the records. Review the reserve study, budget, insurance policy, deferred maintenance, and any pending litigation with qualified management, insurance, and legal professionals. For Fannie Mae Full Review applications dated on or after January 4, 2027, the reserve allocation increases to 15 percent of annual budgeted income.
If you are thinking about selling, get the project documents together early. A current reserve study, budget, insurance information, and clear answers about repairs or litigation make it easier for a buyer and lender to understand the project before the transaction is deep into escrow.
If you are refinancing instead of selling. A refinance is a new loan, which can require a new project review. A building that worked for the original purchase may have different documentation or eligibility today. Ask about the project review early in the application.
The 15 percent reserves rule. Why January 2027 is the bigger story.
August 3 is the news. January 4, 2027, is the story.
For Fannie Mae Full Review applications dated on or after January 4, 2027, the required reserve allocation rises from 10 percent to 15 percent of annual budgeted income. Fannie Mae also requires the highest recommended reserve-study allocation when a current reserve study is used. The impact on dues or assessments depends on the association’s existing budget and obligations.
The prudent next step is to understand the association’s current reserve funding and the reserve study’s recommendation well before a buyer’s loan application depends on it. The policy applies to Fannie Mae’s Full Review standards, not automatically to every condo loan.
If you own a condo in LA, ask your HOA board this exact question: what percentage of our budget is currently allocated to reserves, and what is our plan to get to 15 percent before January 4, 2027. If the answer is anything other than a concrete plan with a timeline, that is a building you should be paying attention to.
Condo insurance deserves a separate review.
Insurance questions are project-specific. The California Department of Insurance notes that an association generally insures the building structure and common areas, while a unit owner’s HO-6 policy typically concerns the unit interior. Ask the association and insurance professional what the master policy covers, its deductible, and how a loss assessment could affect an owner. Do not assume a single insurance rule applies to every project or loan program.
Why project records matter in Los Angeles.
Los Angeles has a wide range of condo projects, ages, association budgets, and insurance arrangements. The records matter because project eligibility is based on the facts of the building, not a citywide assumption.
Reserve and maintenance records. A buyer should understand the association’s budget, reserve funding, planned repairs, and any special assessments. Those details help the lender determine the correct project review and help the buyer understand the property.
Insurance records. The master policy, deductible, and coverage responsibility should be clear before a buyer relies on financing. Those questions require the actual policy and the lender’s requirements, not a general rule of thumb.
The lending program. A Fannie Mae Full Review is not the only possible project review. The lender should identify the investor and program before anyone makes a promise about eligibility or timing.
The January 2027 date. If a buyer’s financing will use Fannie Mae Full Review standards, the association should understand how its reserve allocation compares with the 15 percent requirement that takes effect for those new loan applications.
A practical approach. Request the documents, identify the actual loan program, and let the lender review the project before you rely on a financing timeline. That creates a more useful conversation than labeling a building eligible or ineligible in the abstract.
What to do right now.
Whether you are a buyer or an owner, start with the actual project records and the loan program being considered.
If you are buying a condo in LA: Ask for HOA financials, insurance information, reserve information, and documents about material repairs or litigation early in the process. Ask the lender which review path applies to the actual loan program. If the building is older or has had recent special assessments, a current reserve study can be especially useful context.
If you own a condo and are thinking about selling: Ask your HOA board for a current reserve study, budget, insurance summary, and records of material repairs, assessments, or litigation. Clear records give future buyers a more complete picture of the project.
If you own a condo and have no plans to sell or refinance: You still want your building to remain warrantable, because the value of your unit depends on future buyers being able to get a loan on it. Ask your board the same questions. Show up to the board meeting where this is discussed. The buildings that thrive through this transition are the ones where owners pay attention.
If you are on an HOA board: Work with your management company, reserve-study provider, insurance broker, and legal counsel to understand the association’s facts. Where Fannie Mae financing is relevant, plan for the applicable review standards and the January 2027 Full Review reserve requirement.
What I do for condo buyers and owners in this market.
A lot of mortgage advisors treat condos as if they are just smaller, cheaper versions of single-family homes. They are not. Condo financing has always required a different playbook, and these new rules are going to make that even more true. The buyers and owners who get through this transition without losing money or losing deals are the ones who work with an advisor who knows the specific buildings, the specific HOA management companies, the specific lenders that are flexible on condo overlays, and the specific timing windows that matter.
I have closed loans on condos from Long Beach to Malibu and in basically every coastal city in between. I know which buildings have a history of warrantability problems, which HOA managers respond fast to lender questionnaires, and which lenders have the most workable overlays for LA condo specifics. None of that is in a book. It comes from a decade of doing this in the market.
If you are buying a condo, looking at one, selling one, sitting on a board, or just confused about what these rule changes mean for your specific situation, that is the conversation. There is no fee. There is no obligation. Fifteen minutes on the phone, and you walk away knowing exactly where you stand.
Book a call here. Or if you want to keep reading first, the related field notes below cover the foundational condo financing issues this piece is built on top of.
Sources and review
Last reviewed October 7, 2026. Fannie Mae policy is one investor’s standard and does not determine every condo loan’s eligibility.
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