New Fannie and Freddie Financing Rules Set to Make Condo Buying and Selling More Complicated

Fannie Mae and Freddie Mac, which support about 70% of the U.S. mortgage market, are tightening condo financing standards through early 2027. "Limited reviews" that let many qualified buyers get mortgages after a cursory look at a building's finances and structure were eliminated last month, and starting in January, condo associations will need to allocate at least 15% of assessment income to reserves, up from 10% today.
The changes stem from an ongoing push to improve condo safety following the 2021 Surfside, Florida building collapse, but arrive as the condo market already faces slumping prices, rising supply and buyer wariness toward special assessments and fees. Nationally, condo prices have fallen 2% from their peak, according to Zillow, with steeper drops in parts of Florida — Punta Gorda down 35% and Tampa down 24% from 2022 peaks — as well as Austin (-28%), Denver and Raleigh (both down more than 16%).
Condo sales fell 2.7% in August from a year earlier versus a 1.1% drop for single-family homes, per National Association of Realtors data, and condo supply sits at 6.6 months compared with 4.7 months for single-family homes. Buildings that fail to meet Fannie and Freddie requirements can become "non-warrantable," limiting buyers to cash purchases or higher-rate specialty loans. Agents and lenders told Yahoo Finance that sellers should learn about their HOA's finances and gather paperwork early to keep deals moving smoothly.