Financing condominiums has been a major topic of discussion across the residential real estate industry for the past few years. While condominiums and townhomes can be great starter homes, obtaining a conventional mortgage loan for this type of property is often more challenging than for a single-family residence.
Mortgage lenders are required to look at the health and safety of the entire complex as well as the financial health of the homeowners association (HOA), rather than just the unit being purchased.
As of August 3rd, 2026, Fannie Mae and Freddie Mac just made financing a condominium even more difficult for conventional financing by updating their guidelines. Previously, it was possible to get a ‘limited review’ on a condominium project when the buyer put down at least 10% on a primary residence or at least 25% on a second home. This limited review meant that lenders only had to look into certain aspects of the complex rather than everything.
Now that limited review has been retired, every single condominium looking to obtain conventional financing is subject to a full review of the complex. This means that lenders will be diving even deeper into ensuring the complex is well run and maintained. Specifically, lenders will be forced to obtain budgets, questionnaires, and other documents that were previously not required if limited review parameters were met.
The reality is that there are many condominium complexes which previously had no issues with conventional financing that will now start facing issues. If you are looking to buy a condominium, expect some friction on the financing side for the near future, as it will inevitably take time for complexes to catch up with the new financing landscape.
Regardless of how strong a buyer you might be, if the complex does not meet Fannie or Freddie standards, your loan will be denied, and you will need to obtain alternative financing through a different program. We highly recommend writing offers with longer financing timeframes for this type of property.
If you have any questions, give us a call at (760) 930-0569.
