15%of the yearly budget saved for repairs and replacements, up from 10%, for loan applications on or after Jan. 4, 2027
Aug. 3, 2026the quick “limited review” ended for most buildings with more than 10 units (loan applications on or after this date)
10 or fewerunits: small buildings may be exempt from project review
What is changing
- The shortcut is gone. Since Aug. 3, 2026, lenders can no longer use the quick “limited review” for most buildings with more than 10 units. Now most conventional loans get a full look at the association’s budget, savings for repairs, unpaid dues and insurance.
- The savings rule goes up on Jan. 4, 2027. The association must put at least 15% of its yearly budget into replacement savings (called reserves). It was 10%.
- There is one other way to pass. The association has a reserve study done or updated in the last 3 years, and the board saves at the highest level the study recommends. The lowest level (called “baseline”) does not count.
- If a building does not pass, lenders call it “non-warrantable.” Buyers cannot use a standard Fannie Mae or Freddie Mac loan there. They would need cash or a harder-to-find loan, often with more money down.
Questions to ask your board
- What percent of our yearly budget goes into replacement savings (reserves)? Is it 15% or more?
- Do we have a reserve study that was done or updated in the last 3 years?
- Are we saving at the highest level that study recommends? Baseline no longer counts.
- If we are short, what is the plan to catch up before Jan. 4? Will it mean higher dues or a special assessment?
- How many owners are 60 days or more behind on dues? A high number can fail the review.
- Are there big repairs, safety problems or put-off maintenance that are not fully paid for?
- Is the association in any lawsuit?
- Is our master insurance policy current, and does it meet lender rules?
- Has our management company filled out a lender condo questionnaire lately? Were there any problems?
- How many units are in our building? If it is 10 or fewer, do we qualify for the review exemption?
Papers to ask for
- The current yearly budget
- The most recent reserve study
- The latest financial statements and the report of unpaid dues
- The master insurance policy cover page (the “declarations page”)
- The most recent board meeting minutes
Read the official rules
- Fannie Mae Lender Letter LL-2026-03 (March 18, 2026)
https://singlefamily.fanniemae.com/news-events/lender-letter-ll-2026-03-updates-project-standards-property-insurance-requirements - Freddie Mac Bulletin 2026-C
https://guide.freddiemac.com/app/guide/bulletin/2026-C
Questions about your building?
Call or text. We will point you to the right papers.
Bilal Hameed · Crosstown Realtors Inc.
(773) 207-3652
Bilal@CrosstownRealtors.com
Bilal Hameed, Illinois real estate broker, License #475.219071, affiliated with Crosstown Realtors Inc. · 1455 W Irving Park Rd, Chicago, IL 60613 · Equal Housing Opportunity
Adapted from Crosstown Chicago’s guides by Catalin Maticiuc, used with permission.
General information only, not legal, tax or lending advice. Rules change and each lender makes its own decisions, so check the current rule with your lender and your attorney.