What the New Rules Do to Your Owners' Financing
Program and regulatory figures verified September 18, 2026. Details change; confirm your scenario with us.
This page explains what the agency rules do to financing in your community. It does not tell you what to do about your budget, that is your board's decision with your manager and counsel.
What it means for your owners
Agency project standards decide whether a conventional loan can be made on a unit in your community. They do not regulate your association, and nothing in them requires a board to do anything. What they do is determine whether the buyer for a unit in your building can get a conventional mortgage.
That matters in three ways, and all three land on owners rather than on the association:
- Selling. If the project does not meet the standard, conventional buyers cannot finance a purchase there, which narrows the buyer pool for every owner.
- Refinancing. Existing owners may be unable to refinance into agency financing.
- Equity. Owners may find agency options for accessing equity unavailable.
The specific change and its date
For loan applications dated on or after January 4, 2027, the replacement reserve allocation used in Full Review must be at least 15% of the annual budgeted income assessment, up from 10%. The requirement attaches to the application date, not the closing date.
Separately, since August 3, 2026, where a lender relies on a reserve study rather than the budget line, that budget must include the study's highest recommended reserve allocation. Baseline funding — the option that allows the reserve balance to approach but never fall below zero — is no longer acceptable for this purpose.
The timing, plainly
Associations adopt budgets annually, usually in the autumn. The 2027 budget being approved in many communities right now is the one that determines whether owners can sell to a conventionally financed buyer next year.
We are not in a position to tell you what your budget should be, and we would be the wrong people to ask. What we can tell you is what the number does to your owners, which is the part boards often hear about too late.
If your community is small
The same lender letter expanded the Waiver of Project Review to new and established projects with 10 or fewer units, effective immediately. Projects of 5 to 10 units must not be part of a master association or larger development to use it. For a genuinely small community, project review may be out of the picture entirely.
What we can do
If owners in your community have been told they cannot finance or refinance, there are routes that do not depend on project review, and we are happy to explain them to an owner directly. We are also happy to answer a board's questions about how financing reads your community, without charge and without a pitch.
The dated timeline is at what changed and when, and the review criteria are at why projects fail review.
We are a lender. Association budgets, reserve studies and governance decisions belong to the board, its management company and association counsel. What we can tell you is what those decisions do to an owner's ability to finance or sell.
Frequently asked questions
Does our association have to hold 15% in reserves?
No. The requirement is not a rule about your association, it is a lending standard. From January 4, 2027, a budget allocating at least 15% of annual budgeted income assessment to replacement reserves is what Full Review requires in order for a conventional loan to be made on a unit. What your board budgets is your board's decision with your manager and counsel.
Can a reserve study be used instead of the 15% budget line?
A reserve study can support reserve adequacy, but since August 3, 2026 the budget must include the highest recommended reserve allocation in that study. Baseline funding is no longer acceptable for this purpose.
What happens to our owners if we do not meet it?
Conventional agency financing would be unavailable for units in the project, which narrows the buyer pool on resale and can affect refinancing for existing owners. It does not make the units unfinanceable; non-agency routes exist that do not require project review.
Does this apply to small communities?
Often not. Projects with 10 or fewer units may qualify for a Waiver of Project Review, which removes project review from the transaction. Projects of 5 to 10 units must not be part of a master association or larger development to be eligible.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, accounting or association-governance advice. Agency project standards change; association budgets, reserve studies and governance decisions belong to the board, its management company and association counsel. Loans are subject to borrower and property qualification, and not all projects or borrowers will qualify.