Fannie Mae & Freddie Mac Reserve Funding Update
Key Dates Community Association Managers Should Know
Earlier this year, Fannie Mae and Freddie Mac announced significant changes to condominium lending guidelines affecting condominium project reviews, reserve funding, and the use of Reserve Studies. Several major changes take effect August 3, with an additional reserve funding requirement scheduled to begin in January 2027.
As many community associations begin planning next year’s budgets, this is a good opportunity to review the timeline and make sure your board understands what these changes could mean for your community.
Reserve Funding Timeline
March 18, 2026
Fannie Mae and Freddie Mac announced coordinated updates to condominium project standards, including changes to project review options, enhanced Reserve Study standards used during lender project reviews, and an increase in the standard minimum reserve allocation.
August 3, 2026
Several important updates take effect for loan applications dated on or after August 3, including:
- The Limited Review process is retired. Established condominium projects that previously qualified for Limited Review must instead be evaluated through Full Review or, when eligible, the Waiver of Project Review process.
- Reserve Studies used for lender review must continue to meet Fannie Mae’s eligibility requirements. This generally includes a Reserve Study completed within the previous three years, along with current information about the project’s components, remaining useful lives, and anticipated replacement costs.
- The association's budget must include the highest recommended reserve allocation amount identified in the Reserve Study when the study is used to demonstrate that the project has sufficient reserves.
- The baseline funding method is no longer permitted for this purpose. Baseline funding allows the reserve balance to approach, but not fall below, zero. Under the updated guidance, funding must instead follow the Reserve Study's highest recommended reserve allocation.
January 4, 2027
For applicable loan applications reviewed through the Full Review process, the standard minimum reserve allocation increases from 10% to 15% of annual budgeted assessment income. A qualifying Reserve Study may still be used as an alternative, provided the association’s budget includes the study’s highest recommended reserve allocation.
What Should Boards Be Discussing Now?
Every community is different, but now is a good time to ask:
- Is our Reserve Study current and does it meet Fannie Mae’s lender eligibility requirements?
- Does our reserve funding plan reflect the study’s highest recommended reserve allocation?
- Will our upcoming budget adequately support our long-term reserve funding strategy?
- Could the retirement of Limited Review affect the way our community is evaluated during future financing transactions?
- Have we discussed how these lender requirements could affect owners and prospective buyers who rely on conventional financing?
A proactive conversation now can help avoid last-minute questions during budget season or future real estate transactions.
Looking for More Detail?
We’ve assembled our complete six-part Fannie Mae & Freddie Mac educational series in one place. The articles and videos explain the changes in greater depth and address many of the questions we’re hearing from community associations.
Read the Complete Educational Series
Prefer a quick overview? Keith Ruehl also summarizes the four major changes in a four-minute Reserve Reel.
If you have questions about your community’s reserve planning needs or would like to discuss an upcoming project, feel free to request a proposal. Our team is always happy to answer questions, provide guidance, and help you determine the right solution for your association or property.
