Condo Association HOA Rules Just Got Updated. Trust Me, it Matters...

You wake up from a really restful night of sleep. You know the kind—where the bedroom window is slightly open, the room is cool, but the blankets are warm. You didn’t set an alarm, and you’re oddly excited for the day.

Why?  Because you’ve decided it’s time to go to your first HOA meeting!!!

As a side note, this scenario has happened exactly nowhere on Earth.

BUT—if you’re thinking about buying a condo, or you already own one—there’s a quiet shift happening in 2026 that’s going to matter a lot more than most of these shoved-away headlines suggest (because after all, the only thing more exciting than going to an HOA meeting is reading an article about condo HOAs 😊).

And no, this is NOT one of those “industry-only” updates you can safely ignore.  Fannie Mae and Freddie Mac have rewritten the rulebook for condo associations.

This is going to show up in real ways: higher HOA dues, changes to the marketability of your condo (meaning just because your condo qualified for Conventional or FHA financing before doesn’t mean it still will when you refinance or sell to a buyer who needs financing), tougher lending standards, and more deals falling apart before the finish line if proper HOA due diligence isn’t done upfront.

This is the kind of stuff that already feels confusing when you’re in it… and it’s about to get more so, because the rules are changing underneath us.

Here’s what’s actually going on—without the industry jargon.

First—this isn’t one change. It’s a rollout.

A lot of people are talking about “new condo rules” like a switch flipped overnight.

Not quite.

These changes are rolling out in phases through 2026 and into early 2027. Which means timing suddenly matters more than it used to.

A condo that qualifies for financing today might not qualify six months from now.

That’s not a hypothetical. That’s going to happen.

So if you’re buying, selling, or even refinancing, the calendar is now part of the strategy—whether you like it or not.

HOA dues are likely going up (here’s why)

One of the biggest changes is around HOA reserve funds—basically the savings account your association uses for major repairs like roofs, siding, elevators, and all the fun stuff nobody thinks about until it breaks (or, in the case of that infamous Florida condo… collapses).

The new guideline pushes associations to contribute more into reserves—15% instead of 10% of their annual budget.

Sounds responsible, right?

It is. But there’s no magic pot of money sitting around. That extra funding typically comes from one place:

You.

That means:

• Higher monthly HOA dues
• Or special assessments (the “surprise bill” nobody enjoys)

If you already own a condo, don’t be shocked if your dues creep up. If you’re buying, don’t just look at today’s dues—go to that HOA meeting (yes, really) and ask where they’re headed, and whether your association is already hitting that 15% threshold.

Because “low HOA dues” can sometimes mean “big increases coming soon.”

The bigger issue: it just got harder to get a condo loan

Here’s the part that tends to catch buyers off guard—and I’ve already heard it more than once:

“When I bought it, I got conventional financing… why can’t I do that now?”

Answer: it’s not about you. It’s about your condo association.

Time to go make friends with Karen at the HOA Board Meeting.

Lenders are now required to take a much closer look at the entire condo project—not just you as a borrower.

In the past, there was a streamlined option (called a Limited Review) that allowed certain buyers to move forward with less scrutiny. And honestly, this was always a little wild—different borrowers could trigger completely different levels of review on the exact same building.

Higher down payment? Great credit? Higher income? You might qualify for a “lighter” review, meaning fewer questions about the HOA – because your loan was considered lower risk of default.

That’s going away.

All condos will now require a full review—which means more questions, more documentation, and a lot more scrutiny on the HOA, management company, and board.

In other words: the interrogation room just got more crowded.

Which means more paperwork, more delays, and more ways for a deal to hit a speed bump—or stop entirely.

And here’s the key point most buyers miss:

You can have great credit, solid income, and plenty of down payment…

…and still get denied because of the building.

Not intuitive. Very real.

What lenders are now looking for (that buyers and refinancers should care about)

Since the spotlight is shifting to the HOA, here are the things that actually matter now:

• Healthy reserves – Is the association saving enough for future repairs?
• Insurance coverage – Is the building properly insured, and is it affordable?
• Delinquencies – Are too many owners behind on dues?
• Litigation – Is the HOA involved in lawsuits?

These have always mattered in the background.

Now they’re front and center.

Think of it this way: when you buy a condo, you’re not just buying your unit—you’re buying into the financial health of the entire building.

And lenders are finally treating it that way.

A small silver lining on insurance (with a catch)

There is one area where costs might ease slightly.

New guidelines allow more flexibility in how condo associations insure things like roofs, which can lower premiums.

Sounds great.

But there’s a tradeoff: more of the risk can shift to individual owners.

Fannie Mae and Freddie Mac now allow something called “actual cash value” coverage on certain components like roofs. Here’s the issue—if your roof is 20 years old, the “actual value” might be about the price of a burnt cup of AM/PM gas station coffee.

So if a storm rolls through and the roof is damaged, the insurance payout may only cover a fraction of the replacement cost.

The rest?

That lands on you and the other owners—usually in the form of a special assessment.

But hey… HOA insurance premiums were lower, right?  As a side note, I HATE this new rule.  99% of folks aren’t going to make sure they have replacement coverage on their roof.  And I don’t think our insurance bills are going down anytime soon, do you?  This is a way for insurance companies to make more billions of dollars to put inside their Scrooge McDuck money bins.

Translation: your personal condo insurance (your HO-6 policy) just became a lot more important.

So if you’re buying, don’t just budget for your mortgage and HOA dues. Make sure you understand what your insurance actually covers now.

Because cheaper at the association level doesn’t always mean cheaper overall.

Some condos will get easier to finance (yes, really)

Not every change is negative.

Some smaller condo projects (10 units or fewer)—and some buildings with higher investor ownership—may actually have an easier path to financing than before.

So this isn’t a blanket “condos just got harder” situation.

It’s more of a reshuffling:

• Well-run associations → generally in good shape
• Associations that have kicked maintenance down the road or don’t have enough in their bank accounts → about to feel pressure

The challenge is figuring out which category a property falls into before you’re halfway through a transaction.

Good news for condo investors (with some reality mixed in)

One change flying under the radar is the update to non-owner-occupied (investor) concentration.

Previously, many condo projects needed at least 50% of units to be owner-occupied. If too many units were rentals, financing options tightened quickly.

That rule has been loosened.

That’s good news for certain buildings—especially in urban areas or vacation-style markets where rentals are more common like Las Vegas, San Diego, Palm Springs, etc.

But don’t take that as “anything goes.”

Lenders are still going to evaluate the overall health of the HOA, and high investor concentration can still raise concerns around stability, dues collection, and long-term maintenance.

So yes, this opens some doors.

It just doesn’t eliminate the need for the building to prove it’s financially sound.

What this means for you as a buyer

If you’re shopping for a condo, here’s the practical advice:

You need to pay attention to the HOA as much as the unit itself.

That might not be the fun part—but it’s now the part that can make or break your deal.

Don’t remove contingencies until the HOA has been fully reviewed by your lender. Just because the appraisal came in clean and the inspection didn’t raise issues doesn’t mean you’re in the clear.

Before you fall in love with a place, start asking:

• How much of the HOA dues are going into reserves each year?
• Have there been recent or upcoming special assessments?
• How responsive is the HOA when providing documents?
• Any known insurance or legal issues?

If those answers are unclear or hard to get… that’s a signal.

Not necessarily a deal killer—but definitely something to take seriously. And for the love of that great night’s sleep – do not, I repeat, DO NOT let your HOA document contingency in your purchase contract lapse until you have all the answers.

And if you already own a condo…

This is your heads-up moment.

Pay attention to your HOA’s financials and communication over the next year. Avoid letting your association slip into “non-warrantable” territory.

Yes, there are lenders who will still finance those projects—but usually at higher rates.

That impacts what buyers can afford—and ultimately what they’re willing to pay for your condo.

Which means a smaller buyer pool and more pressure on your value.

Stronger associations will adapt and be just fine.

Others may struggle to meet the new expectations—which can impact:

• Your property value
• Your ability to sell
• A future buyer’s ability to get financing

This isn’t just a lender issue. It’s an ownership issue.

Bottom line

Condo buying just got a little less “plug and play” and a lot more about what’s happening behind the scenes.

The good news? These changes are designed to create more stable, better-funded communities.

The not-so-fun news? The transition is going to be a bit bumpy.

The buyers who win in this environment are the ones who ask better questions early—and don’t assume every condo is created equal.

Because going forward, it’s not just about whether you qualify for the loan.

It’s whether the building does.

And that’s a shift worth paying attention to.

Tell Karen I said hello.

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