Condo Lending Rules 2026: What Florida Boards Must Do

On March 18, 2026, Fannie Mae and Freddie Mac rewrote the rules that decide whether a mortgage can be made on a unit in your building. Fannie Mae issued Lender Letter LL-2026-03 and Freddie Mac issued Bulletin 2026-C the same day. The change that matters most lands on August 3, 2026: Limited Review and Streamlined Review, the abbreviated project reviews that skipped the association's finances entirely, are retired. The Community Associations Institute reports that Limited Review alone accounted for roughly 40 percent of all project reviews. Everything it used to hide is now visible to a lender on every conventional loan — and in Florida, where associations are already carrying milestone inspections, structural integrity reserve studies and a decade of deferred maintenance, that visibility has consequences your board can still get ahead of. This guide covers what changed, what a lender now sees, the trap sitting inside Florida's own reserve statute, and the 90-day plan that lines up with budget season.

This article is general information about mortgage project standards and Florida condominium law, and is not legal, lending or accounting advice. Warrantability determinations are made by lenders applying Fannie Mae and Freddie Mac requirements to your specific project. Budget, reserve and insurance decisions should be made with your association's attorney, accountant, reserve professional and insurance broker.

What changed on March 18 — and why the guide still shows the old rules

Two documents landed on the same day. Fannie Mae's Lender Letter LL-2026-03 and Freddie Mac's Bulletin 2026-C announced a coordinated overhaul of condominium project standards and project insurance requirements, described by HousingWire as the most substantial revision to condo project standards in years. The changes do not all take effect at once. They are keyed to the date a borrower's loan application is received, which is why a sale that goes under contract in late July can still be underwritten under the old rules while the identical sale in August cannot.

Now the part that has confused a lot of managers this summer. If your board goes looking for these rules in Fannie Mae's published Selling Guide, it will not find them. The Selling Guide currently in force was published on June 3, 2026, and it still contains the section headed "B4-2.2-01, Limited Review Process (04/02/2025)" and still states the 10 percent reserve test. That is not an error and it does not mean the news is wrong. Announced changes live in the lender letter and the bulletin until they are folded into the guide at or near their effective dates. Your lender is already working from LL-2026-03. Your board should be too.

August 3: the bypass around your financials closes

To understand why this matters more in Florida than anywhere else, you need to know what Limited Review actually did. It was a short-form project review. A lender using it confirmed a handful of basic facts about the unit and the project and, in Fannie Mae's words, "is not required to validate that the project also meets the eligibility requirements of another project review type." The association's budget, its reserve allocation, its delinquency rate, its litigation and its deferred maintenance were simply not examined.

Limited Review was never available to everyone. It carried maximum loan-to-value limits, and Florida's were the tightest in the country. Fannie Mae's Selling Guide sets out a Florida-specific table for attached units in established condo projects:

Read the first row again. In Florida, Limited Review on a principal residence required a first mortgage at or below 75 percent of value, with combined financing capped at 90 percent. So the Florida buyers whose loans bypassed your association's financials were precisely the ones bringing the most equity — the cash-heavy retiree, the relocating buyer with home equity, the downsizer. In a market where Florida Realtors has been tracking tightening condo financing for two years, those buyers have been holding up sales in buildings whose paperwork would not survive a Full Review.

From August 3, that bypass is gone. Every conventional loan in your building runs through a Full Review or a waiver. The waiver still applies to detached condo units and, under the 2026 update, to projects of 10 or fewer units — which covers a meaningful slice of small Florida associations but almost no mid-rise or high-rise. For everyone else, Full Review is now the front door.

What Limited Review skipped and Full Review examines. Click to zoom.

Fannie Mae's Selling Guide describes the documentation a lender may need to complete a project review, and the list reads like an inventory of your association's filing cabinet: "legal and recorded documents including the covenants, conditions and restrictions, declaration of condominium," along with "project budgets, financial statements, and reserve studies," "architects' or engineers' reports," "evidence of insurance policies and related documentation; and condominium project questionnaires."

Which raises the question every Florida board eventually asks: do we have to fill out the questionnaire? No Florida statute compels it. Chapter 718 obliges you to maintain official records and provide access to them, and it obliges you to issue estoppel certificates for assessment amounts, but a lender questionnaire is a private form with no statutory basis. In practice, declining to answer is a decision to make your own units harder to sell. The workable middle is to designate one person — the manager or the association attorney — to complete questionnaires strictly from the official records, answer what the records support and nothing more, decline to speculate about future assessments or litigation outcomes, and retain a copy of every questionnaire returned.

The ineligibility triggers, quoted

A Full Review is not a formality. Fannie Mae maintains a list of project characteristics that make a project ineligible, and loans in a project marked "Unavailable" in Condo Project Manager cannot be purchased. Five triggers matter most to Florida associations, and it is worth reading them in the original language rather than in summary.

Delinquency. "No more than 15% of the total units in a project are 60 days or more past due on common expense assessments." A separate test applies to each special assessment: "No more than 15% of the total units in a project are 60 days or more past due in the payment of each special assessment." A 100-unit building fails at 16 delinquent units. If your collections have slipped during a special assessment, you can fail the second test while passing the first — see our guide to getting owners to pay.

Replacement reserves. Lenders "must review the HOA projected budget to determine that it is adequate" and that it "provides for the funding of replacement reserves for capital expenditures and deferred maintenance that is at least 10% of the budget." The measurement is specific, and this is the sentence most boards have never read: "the lender must divide the annual budgeted replacement reserve allocation by the association's annual budgeted assessment income." Certain income is excluded from the denominator, and one exclusion is decisive in Florida — "special assessment income."

Single-entity ownership. A project is ineligible where a single entity owns more than "projects with 5 to 20 units – 2 units" or "projects with 21 or more units – 20%." Units under any rental or lease arrangement count toward the calculation, including lease-purchase and rent-to-own.

Critical repairs. This is the Florida trigger. Fannie Mae defines projects in need of critical repairs as "those needing repairs or replacements that significantly impact the safety, soundness, structural integrity or habitability of the project's building(s)." The definition expressly includes "any project that failed to pass state, county, or other jurisdictional mandatory inspections or certifications specific to structural safety, soundness, and habitability" — which is a plain description of a failed milestone inspection under FS 553.899. It also captures "any unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months," and it notes that this figure "does not include ... repairs funded through a special assessment." Named examples include "sea walls, elevators, waterproofing, stairwells, balconies, foundation, electrical systems, parking structures or other load-bearing structures." Milestone inspection reports go to your local building official, and your association's filings sit with the DBPR Division of Condominiums, Timeshares, and Mobile Homes — assume a lender's reviewer can find both.

Evacuation orders. "A project with an evacuation order due to an unsafe condition, either for a partial or total evacuation of the project's building(s), is ineligible until the unsafe condition has been remediated and the building(s) is deemed safe for occupancy."

The trap: a legal reserve pause that costs you warrantability

Here is the collision, and as far as we can tell it has not been written down anywhere for Florida boards.

Florida law gives condominium boards a narrow, hard-won ability to pause reserve funding after a milestone inspection. Under FS 718.112(2)(f)2.e., for a budget adopted on or before December 31, 2028, if the association "has completed a milestone inspection pursuant to s. 553.899 within the previous 2 calendar years, the board, upon the approval of a majority of the total voting interests of the association, may temporarily pause, for a period of no more than two consecutive annual budgets, reserve fund contributions or reduce the amount of reserve funding for the purpose of funding repairs recommended by the milestone inspection."

The statute excludes developer-controlled associations, associations where owners have held control for less than a year, and associations controlled by bulk assignees or bulk buyers. And it adds a condition boards often miss: an association that pauses "must have a structural integrity reserve study performed before the continuation of reserve contributions."

The pause was designed as relief. A building facing an eight-figure structural repair bill can stop funding the roof-replacement reserve for two years and put that money into the concrete restoration the engineer just ordered. It is legal, it is deliberate, and for many buildings it is the only way the arithmetic works.

Fannie Mae and Freddie Mac do not recognize it.

Nothing in the federal project standards makes an exception for a statutory reserve pause. What a lender sees is your adopted budget. A paused budget shows a replacement reserve allocation below 10 percent of budgeted assessment income — below 15 percent for applications received on or after January 4, 2027. And the alternative reserve-study pathway does not rescue you either, because an association that has paused contributions is by definition not funding at the level its reserve study recommends.

Legal under Chapter 718. Unfinanceable under Full Review. Both statements are true at once. Click to zoom.

Until August 3, this collision was survivable. A building with paused reserves could still sell units to buyers putting 25 percent or more down, because those loans went through Limited Review and nobody read the budget. After August 3, that door closes. The board that pauses reserves in the 2027 budget is, in effect, also deciding that its owners will be selling into a smaller buyer pool — cash buyers, portfolio lenders and non-warrantable products at higher rates.

None of which means never pause. It means the vote is bigger than it looks, and the board should present both sides of it to owners. Chapter 718 gives you other tools that the federal rules treat more kindly. Under FS 718.112(2)(f)2.c.(I), "reserves for the items listed in paragraph (g) may be funded by regular assessments, special assessments, lines of credit, or loans," each requiring "the approval of a majority vote of the total voting interests." A line of credit or loan that keeps the budgeted reserve allocation intact while funding the milestone repairs preserves the reserve percentage in a way a pause does not. Our guide to how association loans work covers the mechanics.

January 4, 2027: fifteen percent, and the reserve-study escape hatch

For loan applications received on or after January 4, 2027, the minimum budgeted replacement reserve allocation rises from 10 percent to 15 percent. Because it is keyed to application date and not to your fiscal year, the budget you adopt this autumn is the budget lenders will be reading in January.

Run the arithmetic before the vote. Take your annual budgeted assessment income, exclude the income the guide excludes — incidental income the project does not rely on, income collected for utilities that owners would normally pay themselves, income already allocated to reserve accounts, and special assessment income — then divide your budgeted replacement reserve allocation by what remains. An association budgeting $1.2 million in regular assessments needs $180,000 in budgeted reserve allocation to clear 15 percent, where $120,000 cleared 10 percent.

There is an alternative. Fannie Mae has long allowed a lender to "use a reserve study in lieu of calculating the replacement reserve of 10%" where the study is acceptable, is retained in the project file, shows funded reserves "equivalent to Fannie Mae's standard reserve requirements," and shows that "the project's funded reserves meet or exceed the recommendations included in the reserve study." CAI reports that under the 2026 updates the 15 percent requirement does not apply where an association has a reserve study conducted or updated within the last three years and is following the highest recommended level of funding.

One more Florida detail worth carrying into the budget meeting: the reserve-item threshold in FS 718.112(2)(f) applies to any item "that has a deferred maintenance expense or replacement cost that exceeds $25,000 or the inflation-adjusted amount determined by the division," whichever is greater. That threshold rose from $10,000 under HB 913 in 2025, which means some items your 2025 budget reserved for may now fall below the line even as your federal reserve percentage needs to rise. Those two forces pull in opposite directions, and the 2027 budget is where they meet. Our 2027 budget guide walks the drafting process.

The relief nobody reported

The coverage of this overhaul has been almost uniformly grim, and that is a distortion. Several changes made on March 18 are straightforwardly good for Florida associations, and two of them arrive precisely as the insurance market turns in your favor.

The per-unit deductible cap doubled. Effective for applications dated on or after July 1, 2026, the maximum per-unit deductible under a master property policy went from $25,000 to $50,000, per CAI's analysis of LL-2026-03. Fannie Mae also dropped the requirement that master policies insure roofs on a full replacement cost basis, and dropped the inflation guard requirement. For a board trying to buy down a premium by taking more risk on the deductible, the ceiling is now twice as high. Pair this with a disciplined renewal — the market has genuinely softened, and our insurance renewal playbook and guide to lowering association premiums show how to work it. The one hard edge: cross $50,000 per unit and the project is ineligible, so confirm the per-unit figure with your broker before you bind.

Florida's PERS penalty is gone. New and newly converted condo projects with attached units in Florida previously had to be submitted to Fannie Mae's Project Eligibility Review Service — a slow, centralized approval that applied to Florida and almost nowhere else. It was retired on March 18. Those projects are now reviewed under the same lender-delegated Full Review used in every other state.

The 50 percent investor concentration limit is gone for established projects under Full Review, which helps buildings with heavy seasonal rental ownership. Note that the separate single-entity ownership limit still applies.

Small associations got a waiver. Projects of 10 or fewer units now qualify for a waiver of project review, alongside detached condo units. For a small Florida association, that is the difference between assembling a document package for every sale and assembling none.

It is also worth keeping the ineligible-project lists in view: both agencies publish them, and a building can appear without the board being told. Our guide to the Fannie Mae ineligible list covers how to check your status and how to get off it.

Your August-to-October board calendar

Budget season and the new rules land in the same eight weeks. Here is the sequence that works.

Key takeaways

• August 3, 2026 is the date that matters. Limited Review and Streamlined Review retire for applications received on or after that date. CAI reports Limited Review was roughly 40 percent of project reviews.
• In Florida the impact is larger. Limited Review on a Florida principal residence was capped at a 75 percent first-mortgage LTV, so the buyers who bypassed your financials were the ones bringing the most equity. That bypass is gone.
• Reserves are measured against assessment income, not total budget. Divide budgeted replacement reserve allocation by annual budgeted assessment income, and exclude special assessment income. The floor rises from 10 to 15 percent for applications received on or after January 4, 2027.
• A legal reserve pause can cost you warrantability. FS 718.112(2)(f)2.e. permits a two-budget pause after a milestone inspection with majority approval of total voting interests. Federal project standards make no exception for it. Consider a line of credit or loan under FS 718.112(2)(f)2.c. instead, which preserves the reserve line.
• Special assessments do not fix either test. Special assessment income is excluded from the reserve calculation, and repairs funded by special assessment do not count as funded for the critical-repairs test.
• A failed milestone inspection is a federal ineligibility trigger. Fannie Mae's critical-repairs definition captures any project that failed a jurisdictional mandatory inspection for structural safety, and any unfunded repair over $10,000 per unit due within 12 months.
• Some of this is good news. The per-unit deductible cap doubled to $50,000, roof replacement-cost-basis and inflation guard requirements were dropped, Florida's PERS requirement was retired, the 50 percent investor concentration limit was eliminated, and projects of 10 or fewer units now qualify for a waiver.
• Your SIRS may not be a qualifying reserve study. Florida works on a 10-year SIRS cycle; the federal reserve-study pathway looks back three years and requires funding at the highest recommended level.

Frequently asked questions

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Written by the Mosaic team

Written and fact-checked against the Fannie Mae Selling Guide sections B4-2.1-01, B4-2.1-02, B4-2.1-03, B4-2.2-01, B4-2.2-02, B4-2.2-04 and B7-3-03 as published June 3, 2026; Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C, both dated March 18, 2026, as analyzed by Community Associations Institute and Florida Realtors; and the 2025 Florida Statutes sections 718.111, 718.112 and 553.899. All references reflect requirements as of July 2026. This article is general information, not legal or lending advice. About Mosaic