What Changed, and What Changes January 4
Program and regulatory figures verified September 18, 2026. Details change; confirm your scenario with us.
Written from the lender letter itself rather than the commentary around it, with the dates that actually govern.
The timeline
| Date | Change | Status |
|---|---|---|
| Mar 18, 2026 | LL-2026-03 issued; Freddie Mac coordinated bulletin the same day | Published |
| Immediately | Waiver of Project Review expanded to projects of 10 or fewer units. Projects of 5 to 10 units must not be part of a master association or larger development | In force |
| Immediately | PERS review retired for new condo projects with attached units in Florida; investor concentration limits retired | In force |
| Aug 3, 2026 | Limited Review retired. Established projects must use Full Review, or Waiver of Project Review where applicable | In force |
| Aug 3, 2026 | Reserve-study flexibility tightened: the budget must include the highest recommended reserve allocation in the study. Baseline funding no longer acceptable | In force |
| Jan 4, 2027 | Reserve allocation minimum rises from 10% to 15% of the annual budgeted income assessment, under Full Review | Pending |
What the letter actually says about reserves
The operative sentence is short. Fannie Mae writes that it is revising the reserve allocation requirement for capital expenditures and deferred maintenance from a minimum of 10% to a minimum of 15% of the annual budgeted income assessment, and that all other requirements related to replacement reserves and the review of budget adequacy remain unchanged.
Two details get lost in most summaries. The requirement attaches to loan applications dated on or after January 4, 2027, not to closings. And it applies when using the Full Review process — which, since August, is the only process available to most established projects.
Why the two changes compound
Either change alone would be manageable. Together they are not, because the order matters.
Retiring Limited Review first means every project over 10 units is now being examined. Raising the reserve bar second means the thing being examined got harder to pass. A project that would have sailed through on a streamlined review in July, with a budget that was compliant, can fail in January on the same numbers.
Not everything tightened
It is worth being accurate about this, because the trade coverage has not been. Three changes in the same letter loosened requirements and took effect immediately. Small projects benefit most: the Waiver of Project Review now reaches new and established projects with 10 or fewer units, which removes project review from those transactions entirely.
If your building is small, the 2027 change may not touch you at all. If it is over 10 units, it probably will. Why projects fail review covers what Full Review actually looks at.
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
When exactly does the 15% reserve requirement start?
It applies to loan applications dated on or after January 4, 2027, under the Full Review process. Because it attaches to the application date rather than the closing date, a file taken in late December is governed by the old requirement even if it closes afterwards.
Is the 15% requirement from Fannie Mae or Freddie Mac?
Both. Fannie Mae published Lender Letter LL-2026-03 on March 18, 2026 and states the changes are in alignment with Freddie Mac and coordinated with FHFA. Freddie Mac issued a corresponding bulletin the same day.
What happened to Limited Review?
It was retired for loan applications dated on or after August 3, 2026. Established projects that previously qualified for it must now use Full Review, or the Waiver of Project Review process where the project is eligible. That change is already in force.
Does the reserve study option still work?
It exists but it is narrower. Where a lender relies on a reserve study instead of the budgeted allocation, the budget must include the highest recommended reserve allocation in that study. Baseline funding, the option that lets the reserve balance approach but never fall below zero, is no longer acceptable.
Do small condo projects have to worry about this?
Less so. The same letter expanded the Waiver of Project Review to new and established projects with 10 or fewer units, effective immediately, which removes project review from those transactions. Projects of 5 to 10 units must not be part of a master association or larger development to use it.
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.