If you’re considering buying or selling a condominium right now, there are some important new changes you need to be aware of. Recently, Fannie Mae and Freddie Mac updated their condominium financing guidelines again, and these changes will directly affect whether a condo can qualify for traditional financing. FHA and VA have different, also difficult guidelines.
And as I’ve been saying for years… It’s not just about the buyer qualifying, the condo project itself has to qualify.
Why This Matters to You
After the Surfside condominium collapse in 2021, lenders tightened the rules significantly.
That created a ripple effect:
- Some condos became difficult, or impossible, to finance
- Buyers were forced into higher rate or non-traditional loan options
- Sellers saw fewer qualified buyers
These new changes are an attempt to fix some of that… but they also introduce new challenges.
The Good News, Some Condos Just Got Easier to Finance
If you’re looking at a smaller condo project (10 units or fewer), financing may now be easier.
These projects can now qualify for a simplified approval process, which means:
- Less paperwork
- Faster loan approvals
- More financing options
For buyers, that’s a real advantage. For sellers, it means a larger pool of qualified buyers.
The Flip Side. Larger Complexes May Face More Scrutiny!
If the condo is in a larger development, the standards are actually getting tighter.
Here’s what’s changing behind the scenes:
- HOAs will need stronger reserves (money set aside for repairs and maintenance)
- Financial reviews are more detailed
- Reserve studies must use more conservative funding levels
What does that mean for you?
- Monthly HOA dues could increase
- Special assessments may become more common
- Some buyers may no longer qualify if the project doesn’t meet guidelines
Insurance Changes (Again) This Is a Big One
One of the biggest issues in today’s condo market, especially here in California, is insurance.
These new guidelines allow:
Higher Deductibles
HOA insurance policies can now have deductibles as high as $50,000 per unit.
Translation: If there’s a claim, unit owners may be responsible for a large portion of that cost.
Less Than Full Replacement Coverage on Some Items
For example, roofs may now be insured based on depreciated value (not full replacement cost).
That means: Insurance may not fully cover repairs The difference could come out of HOA reserves—or owners’ pockets
What This Means for Buyers
If you’re buying a condo today, you need to look beyond the unit itself.
You should understand:
- The financial strength of the HOA
- How well reserves are funded
- What the insurance actually covers
- Whether you’ll need additional personal insurance
Two identical units in two different complexes can have very different financing outcomes.
What This Means for Sellers
If you’re selling, this is critical:
Your buyer isn’t just qualifying for the loan, your HOA has to qualify too!
If the project:
- Has low reserves
- Has inadequate insurance
- Has deferred maintenance
…it can:
- Delay the transaction
- Limit financing options
- Or even cause the deal to fall apart
A Shift You Should Understand
One of the biggest changes happening right now is this:
Some costs are shifting from the HOA to the individual owner.
That may help keep HOA dues lower, but it also means:
- Buyers need to be more informed
- Owners may need additional insurance coverage
- Unexpected costs are more likely if something goes wrong
We’re moving into a more “underwritten” condo market.
The days of:
- Minimal review
- Easy approvals
- Overlooked HOA issues …are behind us.
Today, the strength of the entire project matters just as much as the strength of the borrower.
Whether you’re buying or selling a condo, the key question is: “Will this project qualify for financing?”
Because if it doesn’t:
- Your options shrink
- Your costs increase
- And your negotiating position changes
That’s where experience matters.
I help my clients evaluate:
- The condo project itself, it’s economic viability, and evaluate it’s financing capabilities
- The available loan options (including alternatives if needed)
- And how to structure the deal to avoid surprises
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – Southland Regional Association of Realtors (2025)
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
DRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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