Fannie and Freddie raise the condo reserve floor to 15 percent — 2027 budgets are the deadline
Fannie and Freddie raise the condo reserve floor to 15 percent — 2027 budgets are the deadline
2026-09-15 · Montana · Compliance
What happened. The two agencies that decide whether a mortgage in your condominium project is saleable raised the reserve bar by half, and the deadline lands on the 2027 budget a Montana board is drafting this autumn.
The documents
Fannie Mae Lender Letter LL-2026-03, “Updates to Project Standards & Property Insurance Requirements,” and Freddie Mac Guide Bulletin 2026-C, both issued March 18, 2026, each stating they were made in coordination with the Federal Housing Finance Agency and in alignment with one another.1
The reserve change
Fannie: “We are revising our 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.” Lenders must comply “when utilizing the Full Review process for all loan applications dated on or after Jan. 4, 2027.”
Freddie: the allocation “is being increased from a minimum of 10% to a minimum of 15% of the annual budgeted assessment income,” effective “for Mortgages with Application Received Dates on or after January 4, 2027.”2
A paired change took effect earlier, for applications on or after August 3, 2026: where a reserve study is used to justify a lower allocation, the budget must include the study's highest recommended allocation, and the baseline funding method is no longer permitted.
Limited Review is gone
Fannie: “We are retiring the Limited Review process. Established projects previously eligible for Limited Review must now be reviewed using the Full Review process or, when applicable, the Waiver of Project Review process.” Mandatory for loan applications dated on or after August 3, 2026. Freddie retired its counterpart, the Streamlined Review type, on the same date.
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Related Montana HOA Topics
- Fannie Mae Lender Letter LL-2026-03, “Updates to Project Standards & Property Insurance Requirements,” Mar. 18, 2026 (9 pp.) — Fannie Mae's own site blocks retrieval; this is a full mirror of the letter ↩
- Freddie Mac Guide Bulletin 2026-C, Mar. 18, 2026, hosted on Freddie Mac's own Guide server ↩
- Fannie Mae Selling Guide B4-2.1-02, Waiver of Project Review (Aug. 5, 2026) — the five-to-ten-unit master-association condition as codified ↩
- Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments — 100 percent replacement cost value and the $50,000 per-unit deductible cap ↩
- Fannie Mae Selling Guide B4-2.2-01, Full Review Process (Aug. 5, 2026) — still stating the 10 percent reserve allocation as of this revision ↩
- Community Associations Institute advocacy summary of the March 18, 2026 Fannie Mae and Freddie Mac announcements ↩
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