If you are thinking about buying or selling a condominium, you may have noticed that condo financing has become more complicated over the past few years.
A buyer can be financially well-qualified, have a strong credit score, and have enough money for a down payment, but if the condominium project itself does not meet current lending requirements, that can create an issue. Why? Because today, lenders are looking beyond just the individual unit. They are also looking closely at the finances, insurance, and maintenance of the entire condominium community.
What Changed and Why?
The increased scrutiny around condo projects can largely be traced back to the tragic 2021 collapse of Champlain Towers South in Surfside, Florida. The collapse raised important questions about aging buildings, deferred maintenance, structural concerns, insurance coverage, and whether condominium associations had enough reserves to properly maintain their communities.
In response, Fannie Mae and Freddie Mac increased their focus on condo project reviews. The goal was to help ensure that buyers are not purchasing units in buildings with significant hidden risks. While these changes were designed to protect homeowners and strengthen condominium communities, they have also created complexities in the financing process.
With updated guidelines that were just implemented on August 3, 2026, lenders are placing greater emphasis on a more detailed review of the condominium project. Depending on the situation, this may require additional information about the association, including HOA financial statements, reserve funding, insurance coverage, and building maintenance and repairs.
The result? Condo buyers may need to allow more time for the approval process, and sellers should be prepared to provide HOA documents early.
HOA Reserves Matter More Than Ever
One of the biggest focuses of the updated requirements is the financial strength of the HOA. A healthy reserve account helps a condominium community pay for major repairs and large capital expenses.
Historically, some HOAs kept monthly dues lower by delaying maintenance or underfunding reserves. While that may have helped keep costs down in the short term, it can create larger problems later through special assessments or financing challenges. Today, lenders are paying closer attention to whether a condo association is financially prepared for future repairs.
What Does This Mean for Condo Buyers?
If you are purchasing a condo, the most important takeaway is this: Your approval is about more than just you; it is also about the building.
To help avoid surprises:
✅ Work with your lender early in the process
✅ Have the condo project reviewed before getting too far into the transaction
✅ Understand the HOA’s financial condition
✅ Ask questions about reserves, insurance, and upcoming assessments
✅ Be prepared for additional documentation compared with a single-family home purchase
What Does This Mean for Condo Sellers?
If you are selling a condo, preparation can help prevent delays. Having HOA documents organized and available early can make the financing process smoother. Buyers are more confident when they know the condominium community is financially stable and well-maintained. A condo that is easy to finance attracts more potential buyers.
The Bottom Line
The changes to condo lending are not simply about making the process more difficult. They reflect a larger shift toward ensuring that condominium communities are financially healthy, properly insured, and prepared for long-term maintenance.
For buyers, this means doing more homework before purchasing. For sellers, it means understanding that the condition and financial health of the HOA can directly impact a sale.
If you are considering buying, selling, or refinancing a condo, the best approach is to involve your mortgage professional early. Identifying potential issues before you are under contract can help create a smoother and more successful transaction.
Where going the extra mile matters, understanding the details behind your financing matters too. And if a condo doesn’t meet conventional lending guidelines, don’t assume financing is off the table — I also offer non-warrantable condo financing options.
