Buying a condo in the Upper Valley or beyond can be an attractive option for homebuyers who want the benefits of homeownership without all of the maintenance that comes with a single-family home. Condos often have a lower purchase price than single-family homes, and monthly condo fees typically cover services such as building maintenance, snow removal, landscaping, trash and recycling, and master insurance.
But there’s an important difference between buying a house and buying a condo: getting a condo mortgage involves evaluating not only the buyer, but also the financial health and condition of the condo association.
Recent changes to Fannie Mae condo guidelines and Freddie Mac requirements are putting a greater focus on the financial stability, reserves and condition of condo communities. Some of these changes are already in effect, while additional requirements are scheduled to take effect in January 2027.
For buyers considering a condo, understanding these changes can help you know what to expect during the mortgage process—and why the condo association itself matters.
Condo Financials: What Are You Buying?
When you purchase a condo, you’re buying an individual unit within a larger community or building made up of multiple units. In addition to your mortgage payment, you’ll typically pay a monthly condo fee to the association.
Depending on the community, that fee may cover:
- Snow removal and lawn care
- Trash and recycling
- Common-area maintenance
- Building maintenance and repairs
- Master property insurance
- Other shared community expenses
The condo association collects these fees and is responsible for maintaining the common areas and managing the financial needs of the property. Many associations also work with a professional management company.
When a single-family home is sold, much of the focus is on the condition and financial situation of that individual property. With a condo, however, the health of the entire association can affect the buyer’s ability to obtain financing.
That means a buyer can be financially well-qualified for a mortgage and still encounter challenges if the condo project doesn’t meet current lending requirements.
Fannie Mae Condo Guidelines & Recent Changes
In June 2021, the partial collapse of the Champlain Towers South condominium in Surfside, Florida, resulted in the deaths of 98 people. The tragedy brought increased attention to the structural condition and financial health of condominium buildings and prompted changes in how condo projects are evaluated during the mortgage process.
In March 2026, Fannie Mae announced additional changes designed to help lenders identify potential structural and financial risks within condo associations. The goal is to reduce the risk of buyers purchasing into buildings with significant deferred maintenance or insufficient funds for necessary repairs.
A financially healthy association with adequate reserves is generally in a better position to handle major repairs without placing a significant financial burden on individual owners through special assessments.
Changes Already in Effect
When Fannie Mae announced its updates, three changes took effect immediately:
Expansion of the waiver of project review
Projects with 10 or fewer total units
Retirement of PERS review for new condo projects with attached units in Florida
Retirement of investor concentration limits
Additional changes took effect on August 3, 2026, including the retirement of the Limited Review process for established condo projects. Projects that previously qualified for Limited Review may now need to undergo a Full Review before a mortgage can be approved.
Enhanced reserve study requirements also took effect August 3, 2026. These requirements place greater emphasis on the financial condition of the condo association and whether it has adequate reserves to address future repairs and maintenance.
What Is a Special Assessment?
One reason condo association finances are so important during the condo mortgage process is the possibility of special assessments.
A special assessment is a one-time charge to condo owners in addition to their regular monthly condo fee. It may be required when the association doesn’t have enough money in its reserves to pay for an unexpected or major repair.
Special assessments aren’t always avoidable. However, a well-managed association with adequate reserves may be better prepared to handle major expenses without passing the entire cost on to homeowners.
For a buyer, an unexpected special assessment can significantly impact their monthly budget—especially when they are already planning for a mortgage payment, property taxes, insurance and condo fees.
What Changes in January 2027?
More changes to the Fannie Mae condo guidelines are scheduled to take effect on January 4, 2027.
Currently, eligible condo projects are generally required to maintain reserves equal to at least 10% of their annual budget. Beginning January 4, 2027, that requirement will increase to 15% of the condo association’s annual budget.
The goal is to encourage stronger reserve funds so associations are better prepared to pay for future repairs and maintenance and less likely to rely on special assessments when significant expenses arise.
How Will These Changes Impact Buying a Condo?
The biggest potential downside for buyers is that a financially strong, well-qualified borrower may not be able to obtain a condo mortgage if the condo association or project doesn’t meet current lending requirements.
In other words, some issues that could affect your financing may have nothing to do with your income, credit score or down payment. They could instead involve the building’s finances, reserves, insurance, maintenance or other project-level requirements.
The upside is that these reviews can also provide buyers with greater confidence that they’re purchasing into a financially sound and well-maintained community.
As these changes become part of the normal condo lending process, it will take time to see how they affect individual transactions. That’s why working with a lender who understands Fannie Mae condo guidelines and the local market is especially important.
Buying a Condo in the Upper Valley?
With employers like Dartmouth Health, Hypertherm, TomTom and Timken, condo life is a great choice for many residents from young professionals to reitrees. There are a variety of condo communities in Hanover, Lebanon and the surrounding Upper Valley towns to meet these needs. At Legacy Mortgage, we stay current on changing condo lending requirements and maintain familiarity with condo communities throughout the Upper Valley. We also work closely with local real estate agents, attorneys, appraisers and other professionals to help identify potential issues early in the process.
The Legacy Mortgage team collectively boasts over 160 years of industry experience and is well versed in a variety of loan programs including fixed mortgages, ARMS, VA loans, FHA, first time home buyers and more. We have the privilege of partnering with the best local agents, appraisers and attorneys the Upper Valley has to offer. When you work with Legacy Mortgage, you are working with the best local professionals from beginning to end. If you’re thinking about buying a condo, we’re here to help you understand the financing process from the beginning. Reach out to the Legacy Mortgage team at 603-643-7400 to get started.