What 15 percent means for a real Montana budget

The denominator is annual budgeted assessment income, so the arithmetic is direct. An association budgeting $400,000 in assessments moves from a $40,000 reserve line to $60,000 — a $20,000 increase that has to come from somewhere, and the only places it can come from are higher assessments or lower operating spend.

The consequence of not doing it is not a fine. It is that units in the project become harder to finance, which shows up as failed sales, softer values, and owner anger pointed at the board. For a Montana condominium in a market where a townhome or condo median in the northwest counties ran to $587,000 in August 2026, that is a real number attached to a budget line.

The reserve-study change is arguably the sharper one. An association that has been funding to a baseline method, or picking the lower of a study's scenarios, has lost both options for applications from August 3, 2026. The study's highest recommended allocation is now the figure.

The small-project relief, and the master-association trap

Fannie expanded eligibility for a Waiver of Project Review to new and established projects with ten or fewer units, effective immediately. But: “For projects consisting of five- to ten-units, the project must not be part of a master association or larger development.” That condition is now codified in Fannie's Selling Guide, which adds that attached units in a five-to-ten-unit project that is part of a larger development or master association must use Full Review.³

Freddie's analogue differs in ways worth keeping straight: it is called Exempt From Review, the range is 2 to 10 units, and the condition is only that the project not be part of a Master Association — no “or larger development.” Freddie then relaxed it further in Bulletin 2026-6 on May 6, 2026.

For Montana this matters more than it would elsewhere, because phased resort and mountain developments are routinely structured under a master association — which is precisely the structure that forfeits the small-project waiver.

Insurance: two separate changes people keep merging

These are independent, with different effective dates, and neither is conditioned on the other:

• Roofs, effective immediately (March 18, 2026). Freddie: “The requirement to ensure roofs on a replacement cost basis has been retired. The master property insurance policy must now provide for coverage on a replacement cost basis, excluding roofs. (Roofs must be insured but do not have to be covered on a replacement cost basis.)” Fannie mirrors it.
• Per-unit deductible cap, for applications on or after July 1, 2026. The old 5 percent per-unit maximum is retired; a per-unit deductible “now may not exceed $50,000 per unit.” That is a cap on any per-unit deductible for required perils — not a roof deductible — and the per-occurrence cap of 5 percent of building coverage is unchanged.

On replacement cost: the requirement that master coverage “equal at least 100% of the estimated replacement cost value of the project improvements, including common elements and residential structures” is the standard, and it is already codified in Fannie's Selling Guide at B7-3-03. What LL-2026-03 changed is the documentation — retiring the old RCV-documentation requirements in favour of five acceptable forms of evidence: guaranteed replacement cost coverage; extended replacement cost coverage; an insurer RCV estimate; the project's insurance risk appraisal; or a statement from the insurer or another qualified professional. Freddie's bulletin does not restate a new 100 percent rule at all; for Freddie the baseline is pre-existing and untouched.⁴

What to do this autumn, and one caveat about the 15 percent

• Build the 2027 budget at 15 percent. Applications dated from January 4, 2027 are judged against it, and a budget adopted in November is the document a lender will read.
• Get the master policy's replacement-cost basis confirmed in writing, in one of the five acceptable forms.
• Find out whether your per-unit deductible exceeds $50,000. If it does, that is a renewal conversation, not a budget one.
• Expect the questionnaire to get harder. With Limited Review gone for established projects, reserve studies, budgets and master policy declarations get scrutinised where previously they did not.

One honest caveat: Fannie's live Selling Guide at B4-2.2-01, Full Review Process, still says 10 percent as of its August 2026 revision. The 15 percent is announced in the lender letter and not yet codified in the Guide. That is a verified fact rather than a discrepancy to resolve — but the Guide is the document that lags; the announcement is not soft.⁵

None of this is law, in Montana or anywhere. These are investor requirements, and they reach Montana condominiums because Montana condominiums are financed on the same agency standards as everyone else's.⁶