A quiet change in Washington is making it harder to buy and sell condos, and most boards have not heard about it. Fannie Mae and Freddie Mac, the two agencies behind most home loans, tightened their rules for condominium buildings in 2026. If your building does not meet the new standards, buyers in your community may not be able to get a standard mortgage. That makes units harder to sell and can pull down values. Here is what changed and where your board should focus.
What changed
Three updates matter most for Florida associations.
First, higher reserves. Associations will need to put at least 15 percent of their annual budget into reserves, up from 10 percent, starting January 4, 2027. Second, the shortcut is gone. The “limited review” that let many condo loans skip a deep look at the association ended on August 3. Lenders now run a full review of your building’s finances, insurance, and condition on most loans, though very small buildings of 10 units or fewer may qualify for a waiver. Third, the agencies changed some insurance rules, including allowing actual cash value coverage, which pays the depreciated amount, on roofs instead of full replacement cost.
The bigger picture: these standards trace back to the 2021 Surfside collapse. The goal is to keep loans away from buildings that are underfunded or deteriorating. The side effect is that a building that falls short can end up effectively unmortgageable, something the coverage has started calling blacklisting.
Where insurance fits in
A full review means a lender looks closely at your master insurance policy. Fannie Mae requires an association to insure its buildings for 100 percent of their replacement cost. If your coverage is based on an old or low number, you can fall short of that standard, and that can hold up a buyer’s loan.
This is already Florida law too. Condominium associations must base property coverage on the building’s replacement cost, set by an independent appraisal and updated on a regular schedule. One accurate number serves both: it satisfies the state, and it supports your building’s standing with lenders.
What your board should do
Ask three questions now. When was our replacement cost last set, and does it reflect today’s construction costs? Does our master policy meet the 100 percent replacement cost standard? Are our reserves on track for the higher contribution requirement?
The reserve question is for your reserve specialist and your budget. The insurance question starts with a current replacement cost appraisal. Getting that number right is one of the simpler steps a board can take to keep a building financeable.
Prestar is an insurance appraisal firm that has completed replacement cost appraisals for Florida condominium and homeowners associations for about twenty years. If it has been a few years since your building’s value was reviewed, now is the time, before a buyer’s loan is the thing that surfaces the gap.
