Condo buyers and sellers in Northern Virginia need to be aware of significant changes to conventional condo financing that began August 3, 2026, with another major requirement taking effect in January 2027. The changes come from Fannie Mae and Freddie Mac and affect how lenders determine whether a condominium project qualifies for conventional financing.

The goal is to reduce the financial and structural risks associated with underfunded condominium associations. Fannie Mae has specifically noted a correlation between associations with inadequate reserves and projects experiencing significant deferred maintenance or critical repairs.

What Changed August 3?

One of the biggest changes is the elimination of the Limited Review process. Previously, certain condo buyers could qualify for financing using a streamlined review that required less scrutiny of the overall condominium association. For loan applications dated August 3, 2026 or later, eligible projects generally must undergo a Full Review, unless they qualify for a waiver.

That means lenders may look more closely at the association’s budget, reserves, insurance, deferred maintenance, critical repairs and other project-level issues. In practical terms, the financial health of the entire condo association becomes even more important to an individual sale.

There is some good news for smaller communities: Fannie Mae expanded its Waiver of Project Review to qualifying new and established projects containing 10 or fewer units, subject to certain requirements.

The January 2027 Reserve Requirement

Another important change arrives with loan applications dated January 4, 2027. Under Fannie Mae’s Full Review standards, condominium associations will generally need to allocate at least 15% of annual budgeted assessment income toward replacement reserves, up from the previous 10% minimum.

Associations that don’t meet the percentage requirement aren’t necessarily automatically disqualified. A qualifying reserve study may be used to demonstrate adequate funding, but the association must budget at the highest recommended reserve allocation identified in that study; Fannie Mae will no longer permit the baseline funding method for this purpose.

For some Northern Virginia condo communities, getting to that level could mean increasing monthly condo fees, adjusting spending or completing/updating reserve studies.

A Big Change for Investor Ratios

Interestingly, while some requirements are becoming stricter, investor concentration rules are becoming more flexible.

Fannie Mae retired its previous rule limiting investment-property concentration to 50% in established condo projects undergoing Full Review for investor loans. Investor concentration limits no longer apply within Fannie Mae’s Full Review lender certification process.

This could be particularly important in Northern Virginia communities with a large percentage of rental units. Previously, high investor ownership could make financing an investment purchase difficult even when the association was otherwise financially sound. Removing that restriction potentially expands the buyer pool for those communities.

However, this does not eliminate every owner-occupancy requirement. For example, separate presale requirements continue to apply to new and newly converted condo projects.

What This Means for Northern Virginia Buyers and Sellers

For buyers, the upside is greater scrutiny of a condo association’s finances and physical condition before purchasing. That can help uncover underfunded reserves, deferred maintenance or potential future assessments. The downside is that financing may take longer, require additional association documentation or potentially be denied because of an issue with the project rather than the buyer.

For sellers, well-managed communities with strong reserves, adequate insurance and good maintenance records may become more attractive and easier to finance. The removal of the investor concentration restriction may also help owners in rental-heavy communities. The downside is that sellers have limited control over their association. A perfectly maintained unit could encounter financing problems because the condo association itself doesn’t meet lending requirements.

Moving forward, condo transactions in Northern Virginia will require more due diligence before an offer is written and earlier in the listing process. Buyers should work with lenders experienced in condo financing, while sellers and their agents should investigate the project’s financing eligibility, reserve funding, insurance and outstanding repair issues as early as possible. In the new environment, you’re no longer just buying—or selling—a condo unit. You’re also buying into the financial health of the association.