A New Condo Rule Buyers & Sellers Need to Know

There’s a lot to love about condo living: less maintenance, great amenities and locations, and the ability to own without taking on all the responsibilities of a single-family home.

But if you’re buying or selling a condo, there’s another piece of the puzzle becoming increasingly important: the financial health of the condo association.

CONDO RESERVES ARE GETTING MORE ATTENTION

If you’ve bought a condo before, you probably remember your lender asking for things like the HOA budget, insurance information, meeting minutes and other documents about the building or community.

Expect that scrutiny to continue increasing.

Fannie Mae has introduced changes to its condo project standards that will affect how lenders evaluate condominium communities. Beginning August 3, 2026, changes to the project review process take effect, including the retirement of the Limited Review process and stricter project-level requirements.

Then, beginning January 4, 2027, the minimum replacement-reserve allocation for certain Full Review condo loans will increase from 10% to 15% of the association’s annual budgeted assessment income.



In other words, lenders will be looking more closely at the financial health, reserves, insurance and overall condition of the condo community, not just the individual buyer and their finances.

WHY DOES THIS MATTER?

Because when you buy a condo, you're not just buying your individual unit. You're also financially connected to the overall health of the community. Insufficient reserves can mean deferred maintenance, unexpected special assessments or higher HOA fees down the road.

WHAT THIS MEANS FOR BUYERS

If you're purchasing a condo, getting pre-approved is only part of the equation.

Your lender may also need to review the condo project's financials, insurance, repairs, reserves and other documentation to determine whether the project meets applicable lending requirements. Fannie Mae specifically notes that lenders are responsible for reviewing condo projects during underwriting.

In other words: don't wait until you're under contract to find out whether the condo you're buying is financeable.

This is where having a knowledgeable lender and agent matters.

AND SELLERS HAVE HOMEWORK, TOO

Having your HOA budget, reserve information, insurance documents, meeting minutes, assessments and other project documentation organized early can help identify potential financing issues before you have a buyer sitting at the closing table.

And if an association has low reserves, upcoming assessments or significant deferred maintenance, those issues can potentially affect the pool of buyers who can obtain conventional financing.

AND SPEAKING OF CONDOS...

That brings me to my newest listing at 3 Juniper Ct Unit 125 in Clifton's Evergreen community that just hit the market!

OPEN HOUSE SAT & SUN, AUG, 21st & 22nd FROM 1-3PM!

This beautifully renovated 2BR, 2BTH top-floor corner unit offers one-floor living with vaulted ceilings, abundant natural light and a peaceful, park-like setting overlooking lush greenery.

Inside, you'll find a renovated kitchen with quartz countertops and newer appliances, a spacious primary suite with a renovated en-suite bath and walk-in closet, a second bedroom with its own renovated bathroom, hardwood plank floors, a wood-burning fireplace, recessed lighting, in-unit laundry and newer HVAC.

And for commuters? 

Major highways are nearby, the express bus to NYC is across the street, and the train station is just around the block.

Plus: low HOA fees and low taxes.

Whether you're a first-time buyer looking for an easier entry into homeownership or you're ready to downsize without giving up space, this one is worth checking out.

CHECK IT OUT: 3 JUNIPER CT UNIT 125 CLIFTON, NJ

THE BOTTOM LINE

Condo buyers are going to need to think beyond the four walls of the unit.

The financial health of the entire community matters.

And for sellers, understanding the condition of your HOA's finances before listing can help you avoid surprises later.

That's exactly why having the right team in place from the beginning can make all the difference.

Thinking about buying or selling a condo? Let's talk before you make your move.

P.S If you know someone looking for a spacious, renovated condo with easy NYC access, send them my way!