Fannie Mae's 15% Condo Reserve Rule: What Boards Should Know

This guide explains the rule for board members. It isn’t legal or lending advice. We don’t claim that any study will be accepted by a lender, so ask your lender’s condo review team.

What’s changing

Lenders that sell condo loans to Fannie Mae and Freddie Mac check the condo project, including its budget. Fannie Mae’s stated reason for the change is “a correlation between condo projects with underfunded reserves for capital expenditures and those in need of critical repairs.” Under the 2026 changes:

• August 3, 2026: new limits on how a reserve study can be used took effect. The shorter Limited Review also ended, so established projects now go through Full Review or qualify for a waiver.
• January 4, 2027: the minimum goes up. Freddie Mac’s Bulletin 2026-C, third-party copy says the allocation “is being increased from a minimum of 10% to a minimum of 15% of the annual budgeted assessment income.” We read a third-party copy of Fannie Mae’s letter, which describes the same change under Full Review. Check Fannie Mae’s own version.

As of its October 2026 version, the Selling Guide page still shows 10%. Industry groups asked for a delay. We found no sign that one was granted, but check before relying on these dates. Freddie Mac also says a lender with an unexpired project review “must still confirm that the project complies” with the new requirements.

How to work out your percentage

Divide the budgeted reserve contribution by the annual budgeted assessment income. The Selling Guide excludes “incidental income,” “income allocated to reserve accounts” and “special assessment income” from the income side. Freddie Mac’s FAQ, still worded at 10%, says special assessments “cannot be used in lieu of the 10% budget reserve allocation,” so don’t expect an assessment to fill this gap.

Where a reserve study fits

A study can be an alternative when a budget doesn’t meet the percentage minimum. Fannie Mae’s rulebook, the Selling Guide, sets these conditions:

• Funding level: “The budget must include the highest recommended reserve allocation amount in the reserve study.”
• Baseline funding: Baseline funding, where reserves approach but never fall below zero, can’t be used for this.
• Age: The study or update must have been completed within three years of the date the lender approves the project.
• Who prepares it: An independent third party with specific expertise. The guide’s examples include “a reserve study professional with reserve study credentials,” “a construction engineer,” “a certified public accountant who specializes in reserve studies,” or “any professional with demonstrated knowledge of and experience in completing reserve studies.”

Study firms say many associations need more than 15%, so don’t count on a study to lower your number.

We’re a new firm, with no credential or track record yet, so a lender may question a study from us. Ask before booking.

The practical catch: “highest recommended”

Many studies show more than one funding plan. Freddie Mac’s FAQ, and excerpts of Fannie Mae’s, say that when a study uses both threshold and full funding, the budget must fund the full-funding amount. So a report with several plans could commit a board to the largest number if it relies on the study for this exception.

The guidance we read doesn’t define “recommended” in every case. Ask your lender how they’d read your study before you rely on it. Our guide to funding plans explains the terms.

Who this affects

Not every association. Project review is waived for some loans, including detached condo units, most condos of 10 or fewer units that aren’t part of a larger development, and most planned unit development units, according to Fannie Mae’s Selling Guide. As of November 2026, FHA has its own rules, which we didn’t find moving to 15%. Whether the 15% applies to co-ops isn’t clear from what we read.

If your project does need review and falls short, owners and buyers could have trouble getting these loans. That can affect resale, even for owners who aren’t borrowing.

What a board can do now

1. Work out the percentage using the calculation above.
2. Ask a lender’s condo review team how your project would be treated.
3. Check your last study’s date and which funding plans it shows.
4. Plan the dues conversation early. Going from 10% to 15% is a real change, and owners will want to see why.