Starting August 3, a large down payment will no longer be enough to fast track a condo loan. Fannie Mae and Freddie Mac are retiring a review process that lenders have relied on for years, and it could affect anyone buying or selling a condo in Connecticut right now.
If you have a condo purchase or listing in the works, or you're just trying to understand the market, this one's for you. No fluff, no jargon. Just what's real.
So What's Actually Changing?
For years, lenders had two ways to evaluate a condo project for a conventional loan. A Full Review, which digs into the association's budget, reserves, insurance, and any lawsuits. Or a Limited Review, sometimes called a Streamlined Review, which let buyers with strong credit or a big down payment skip most of that scrutiny.
That shortcut goes away for any loan application dated August 3 or later. From that point on, almost every conventional condo loan will require a Full Review, no matter how much the buyer puts down.
Why Is This Happening?
This isn't a random policy shift. It's part of a broader push by Fannie Mae and Freddie Mac to reduce risk in condo communities with aging buildings or thin reserves. Regulators have been tightening these rules since the Champlain Towers South collapse in 2021, and this is the biggest change yet.
A couple other details worth knowing. Master insurance policies with a deductible above $50,000 per unit will make a building ineligible for conventional financing. And starting January 4, 2027, associations that put less than 15 percent of their annual budget toward reserves will get flagged the same way.
What This Means If You're Buying
Some condo communities with deferred maintenance, weak reserves, active litigation, or insurance gaps may no longer qualify for conventional financing at all. That can happen even if you personally are fully qualified for the loan.
Before you write an offer on a condo, it's worth asking a few questions about the building itself. How healthy are the reserves? Is there any pending litigation? What does the master insurance policy actually cover? A quick conversation before you're under contract can save you a lot of stress later.
What This Means If You're Selling
If you own a condo and you're thinking about listing, it's worth understanding now whether your association could run into trouble with a Full Review. The last thing you want is a buyer's financing to fall apart during underwriting because of something that could have been flagged early.
Not Sure Where to Start? That's Exactly Why You Should Reach Out.
Condo financing has always taken a little more strategy than a single family purchase, and this change makes that even more true. You don't need to have it all figured out before reaching out. Tell me where you're at, and we'll talk through it together. No agenda, no pressure. I'm at [email protected] or (917) 319-3044. Just say hi.
