Fannie Mae condo rules in effect July 2026: deductibles, reserves, and review paths

For loans delivered on or after July 1, 2026, Fannie Mae will require that the master property insurance deductible not exceed $50,000 per unit when the deductible is allocated by unit count or ownership interest.

Associations with hurricane or wind deductibles expressed as a percentage of building value have been a common stumbling block in coastal markets.

A large master deductible can trigger loss assessment exposure for unit owners and can also push a project off warrantable status for agency lending.

If you are shopping in Florida, the Gulf Coast, or other wind-exposed metros, ask for the current master policy declarations page early in the process.

SEL-2026-03 increases the annual reserve contribution requirement from 10% to 15% of the operating budget for projects under the Full Review path in the September 30, 2021 project standards version.

The same 15% threshold applies to second home and investment property projects under the April 3, 2019 version.

Higher required reserve funding can mean higher monthly assessments even when the roof and elevators look fine on a walk-through.

Compare the budget you receive at contract against the reserve line Fannie Mae expects lenders to verify.

Fannie Mae will no longer accept new submissions under the Limited Review condo path for applications dated on or after August 3, 2026.

Limited Review allowed some lower-risk projects to skip a full questionnaire in exchange for tighter loan-to-value limits.

After the sunset date, more projects will need Full Review documentation, including budget, insurance, and litigation questions answered by the association or management company.

That can add one to three weeks to loan processing when the management firm is slow to return forms.

The announcement also clarifies insurance agency relationship requirements and updates project review submission guidance in the selling guide.

Lenders may ask for updated master and flood policies, evidence of fidelity coverage, and confirmation that the association is not in active litigation that affects safety or marketability.

None of that replaces your own resale packet review, but it increases the overlap between what you should diligence and what underwriting will require.

Request the master insurance summary and budget before you waive financing contingencies.

If the building is borderline warrantable today, ask your lender whether Full Review under the new reserve and deductible tests is realistic.

Pair agency rules with local context using guides on HO-6 coverage, wind deductibles, and transfer fees so you understand cash needs beyond the down payment.

SEL-2026-03 is a lender delivery standard, not an HOA bylaw change, but it reflects the financial health signals Fannie Mae wants to see in condo projects nationwide.

Fannie Mae Selling Guide Announcement SEL-2026-03 states that for loans delivered on or after July 1, 2026, the master property insurance deductible may not exceed $50,000 per unit when allocated by unit count or ownership interest.

The same announcement raises annual reserve funding requirements from 10% to 15% of the operating budget under the September 30, 2021 project standards version, and ends Limited Review submissions for applications on or after August 3, 2026.

Florida, Texas, and Louisiana buyers should read our state guides first — wind deductibles and reserve shortfalls are common Full Review triggers under the new thresholds.

Use our warrantable condo guide, HOA reserve study guide, and condo debt-to-income guide when a lender flags a project for insurance or reserve deficiencies during underwriting.