If you own a condo in Oakland County, Macomb County, or anywhere in Metro Detroit or you’re planning to buy or sell one, revised guidelines from Fannie Mae and Freddie Mac are about to change how that transaction gets financed. These aren’t small tweaks either. This is one of the most significant overhauls to condominium lending standards in years, and it will affect every conventional loan on a condo in Michigan.

Here’s what’s happening, when it takes effect, and what it means for you.

What Changed and Why

On March 18, 2026, Fannie Mae and Freddie Mac released coordinated updates to their condo project standards and insurance requirements. Fannie Mae published its changes in Lender Letter LL-2026-03, and Freddie Mac issued a matching bulletin. The two agencies rarely move in lockstep this closely, which tells you how serious this shift is.

The short version: getting a condo approved for a conventional loan is about to require more documentation, more scrutiny of the HOA’s finances, and more attention to insurance coverage than it has in the past.

The Big One: Limited Review Is Going Away

For years, many condo purchases sailed through with a “Limited Review”, a fast-track process that let buyers close without a deep dive into the condo association’s financials or operations.

Key date: August 3, 2026, is when the Limited Review shortcut disappears for the vast majority of communities.

Once this deadline passes, any condo project with more than 10 units will automatically be routed into a Full Review, meaning lenders will need to dig into the HOA’s budget, reserves, insurance, litigation history, and more before a loan can close.

There’s a carve-out for very small communities: projects with 10 or fewer units can still qualify for an expanded Waiver of Project Review, as long as they aren’t part of a master association and carry proper insurance.

One practical note for anyone with a deal in progress: loan applications dated before August 3, 2026, can still be processed under the current, more lenient guidelines. If you’re a realtor with a condo buyer on the fence, timing that application matters right now!

Reserve Funding Requirements Are Getting Stricter

HOA’s will need to allocate more of their annual budget toward reserves. The minimum jumps from 10% to 15% of the budget. This is a HUGE change! Property managers, condo boards and even the public know that 10% is what you need to be able to finance a condo conventionally.

Key date: January 4, 2027. This is when the higher reserve requirement takes full effect. Associations that are underfunded will have some runway to adjust, but boards that don’t start planning now may find their building’s warrantability at risk down the line. I can envision a lot of financing delays, scrambling by HOA’s, and angry buyers and sellers of condos whose budgets have not been adjusted to accommodate the new requirements.

Reserve studies themselves are also under new scrutiny. They will need to reflect the “recommended” funding option (rather than a bare-minimum baseline) and be no more than 36 months old.

This matters to buyers and sellers because if a condo association falls out of compliance, the entire building can lose its conventional financing eligibility, not just one unit. That’s a problem for every owner in the building, not only the person trying to sell.

Insurance Requirements Are Shifting Too

There are two changes worth knowing here:

• A new cap on deductibles. If a condo association’s master insurance policy carries a per-unit deductible above $50,000 starting July 1, 2026, the building can be classified as non-warrantable meaning conventional loans won’t be available for units inside it.
• More flexibility on roof coverage. Fannie Mae and Freddie Mac will now allow Actual Cash Value coverage on roofs for both single-family homes and condos, which can affect what associations pay for premiums and what they’re required to carry.

What This Means for Metro Detroit Realtors

If you sell condos in Birmingham, Royal Oak, Ferndale, Rochester Hills, or anywhere in the Metro Detroit market, this is worth building into how you talk to clients right now:

• Ask about HOA financials earlier in the process. Full Review means the association’s reserve study, budget, and insurance details all matter before a loan can close not just at underwriting.
• Flag non-warrantable risk to sellers. A condo board that’s been underfunding reserves or carrying a high insurance deductible could make their own building harder to sell to conventional buyers.
• Get ahead of timing. Buyers with applications in before August 3, 2026, may still benefit from the old, faster review process.

What This Means for Condo Buyers and Sellers

If you’re buying a condo in Metro Detroit, expect your lender to ask for more paperwork about the HOA than they might have a year ago, budgets, reserve studies, insurance certificates, and meeting minutes could all come into play.

If you’re selling, it’s worth finding out sooner rather than later whether your association’s reserves and insurance are in good shape. A building that falls out of warrantable status doesn’t just make your unit harder to finance it affects every owner trying to sell in that community.

The Bottom Line

These changes are designed to make condo associations more financially sound, but in the short term, they add friction to condo transactions across Oakland, Macomb, and Wayne counties. Whether you’re a Realtor prepping clients for what’s ahead, an HOA board getting reserves in order, or a buyer or seller trying to understand how this affects your closing timeline, the earlier you plan for it, the smoother the transaction.

As a Certified Divorce Lending Professional working at the intersection of complex financing scenarios, I spend a lot of time helping buyers, sellers, and Realtors navigate exactly this kind of guideline change. If you have a condo transaction in the pipeline and want to know how these new rules might affect it, I’m happy to walk through the details.

Marc Edelstein Mortgage Lender, Metro Detroit Powered by Ross Mortgage Corporation NMLS# 533706