Assistant General Counsel

Fannie Mae & Freddie Mac changed the rules on condo financing - Here's what Seattle buyers need to know. If you're shopping for a condo in Seattle, Bellevue, Kirkland, Tacoma, or anywhere in King, Pierce, or Snohomish County, there's something you need to know: the rules just changed. On March 18, 2026, Fannie Mae and Freddie Mac issued Lender Letter LL-2026-03 and Guide Bulletin 2026-C - a coordinated update to how condominiums qualify for conventional financing. Some of the changes expand access to more buildings. Others will make it harder for some projects to qualify. And a few will affect what happens at closing. Here's a breakdown of what changed, what it means for buyers, and what questions to ask before you make an offer on a condo. These guideline changes also impact homeowners who are planning on refinancing their condo with a conventional mortgage. Why condo financing is different in the first place. When you buy a single-family home, the lender evaluates you and the property. When you buy a condo, the lender evaluates you, the unit, and the entire association - its finances, insurance, reserves, maintenance history, and ownership mix. Fannie Mae and Freddie Mac set the standards that most conventional lenders follow. If a condo project doesn't meet their guidelines, it can't be financed with a standard conventional loan. That affects buyers, sellers, and property values alike. These guidelines have been in flux since the 2021 Surfside collapse in Florida. The March 2026 updates are the most significant revision since then - and they affect condo buyers across the country, including here in the Seattle metro area. What changed: the big picture. The updates fall into three buckets: reserve requirements, insurance requirements, and how projects get reviewed. Some changes are already in effect. Others phase in through mid-2026 and into 2027. 1. The 50% investor limit is gone. Previously, conventional loans in established condo projects required that no more than 50% of units be investor-owned (rented out). That limit has been eliminated - effective immediately. What this means for buyers: More buildings in urban cores - including many Seattle and Bellevue high-rises with higher rental concentrations - may now qualify for conventional financing that previously didn't. If you've heard that a building was ineligible because of investor concentration, it's worth asking your lender to take another look. 2. Small projects get a streamlined path. Condo projects with 10 or fewer units now qualify for a "Waiver of Project Review" - meaning buyers in these smaller buildings (up to 10 units) can skip the full project eligibility review. Previously, this waiver applied only to projects with 4 or fewer units. What this means for buyers: If you're considering a smaller condo building - boutique developments, converted fourplexes, small urban infill projects - financing may be simpler than it used to be. 3. Limited Review is being retired. This is the change that will have the most operational impact on buyers and their agents. Fannie Mae and Freddie Mac are eliminating the "Limited Review" process, which was a streamlined documentation path used for roughly 40% of all conventional condo loans. Going forward, established projects will need either a Full Review or a Waiver of Project Review. Full Reviews require more documentation from the association - including questionnaires, budgets, insurance certificates, and meeting minutes. Limited Review is already being retired by many lenders. It must be fully retired for all loan applications dated August 3, 2026 or later. What this means for buyers: Expect more paperwork, more back-and-forth with HOAs, and potentially longer timelines during the loan process. If an association is slow to respond to lender questionnaires, it can delay closing. When you're writing an offer on a condo, this is worth factoring into your contingency timeline. 4. Reserve requirements are increasing. Effective for budgets starting January 4, 2027, condo associations will need to allocate at least 15% of their annual budget to reserves - up from the current 10%. Associations that have completed a reserve study within the last three years have a pathway to use the study's funding recommendation instead, but baseline funding (essentially budgeting for $0 in reserves) is no longer allowed. What this means for buyers: If an association's reserves are underfunded, it may not qualify for conventional financing after January 2027. Underfunded reserves also correlate with deferred maintenance and special assessments - things that can affect your monthly costs after you move in. When reviewing HOA documents, pay close attention to reserve funding levels. 5. Insurance rules are more flexible - But HO-6 requirements are new. The updates make some insurance requirements easier to meet, which should help more buildings qualify and potentially lower HOA costs: * Roof coverage no longer needs to be replacement cost value (RCV). Actual cash value (ACV) is now acceptable - effective immediately. * The maximum per-unit deductible on the master insurance policy increases to $50,000 per unit, giving associations more flexibility in structuring their coverage. Effective July 1, 2026. However, there's a new requirement for individual unit owners: if the master policy includes a per-unit deductible, or if any interior improvements aren't covered by the master policy, you'll be required to carry an HO-6 (condo unit owner) insurance policy. Also effective July 1, 2026. What this means for buyers: If you're buying a condo with a high master-policy deductible, budget for an HO-6 policy. This isn't unusual - many condo buyers carry HO-6 coverage anyway - but it's now a lender requirement in certain situations. Key dates at a glance. | Change | Effective Date | | Investor concentration limit (50%) eliminated | March 18, 2026 - immediate | | Waiver of Project Review expanded to 10-unit projects | March 18, 2026 - immediate | | ACV roof coverage permitted | March 18, 2026 - immediate | | Master policy deductible increased to $50,000/unit | July 1, 2026 | | HO-6 required when master policy has per-unit deductible | July 1, 2026 | | Limited Review fully retired | August 3, 2026 | | Reserve requirement increases from 10% to 15% | January 4, 2027 (for new budgets) | What to ask before you make an offer on a condo. Before writing an offer on any condo in the Seattle area, it's worth doing a quick project-eligibility check. Here are the questions I ask on behalf of buyers: * Is this project currently approved/eligible in Fannie Mae's Condo Project Manager (CPM)? * What percentage of units are investor-owned vs. owner-occupied? * What percentage of the annual budget goes to reserves? * Has the association completed a reserve study in the last three years? * Are there any known special assessments pending? * Is there any deferred maintenance flagged in the association's meeting minutes? * Does the master insurance policy have a per-unit deductible? If so, what is it? Some of this information comes through the HOA questionnaire during the loan process. But some of it - especially the reserve study and meeting minutes - is available in the seller disclosure documents. The sooner you review them, the fewer surprises you'll have. Still have questions about buying a condo? Buying a condo is more complex than buying a single-family home - and these new guidelines add another layer. I help buyers in King, Pierce, and Snohomish County understand what their financing options look like before they fall in love with a unit. If you're thinking about buying a condo in the Seattle area, let's talk through the numbers. Ready to explore your home buying options? I've been helping Washington State homebuyers navigate the mortgage process since 2000. No pressure, no jargon - just an honest conversation about what's possible for you. Rhonda Porter · Licensed Mortgage Advisor · NMLS #121324 · Washington State Loading...

Mortgage Capital Trading (MCT) has deployed three new Freddie Mac integration updates within its MCTlive! platform, expanding lender liquidity and execution options. The updates include loan-level pricing and committing support for Freddie Mac's Co-Issue All-In Funding API, and two new specified pool pay-up categories: LTV and Manufactured Housing. The primary integration supports Freddie Mac's enhanced Cash Pricing and Committing APIs for loan-level CIX AIF pricing. Effective 30 March 2026, the Co-Issue All-In Funding allows sellers to receive both the Freddie Mac Asset Price and CIX Buyer SRP at loan purchase, providing lenders complete loan-level execution visibility. MCT deployed support for the LTV category by 10 March and Manufactured Housing by 30 March, demonstrating rapid response to Freddie Mac's product development timeline.

Fannie Mae and Freddie Mac shares surged up to 41% and 34% respectively on Monday after billionaire investor Bill Ackman urged investors to ignore war fears and buy the government-sponsored mortgage entities, calling them "stupidly cheap" with potential for 10-times returns. Ackman's Pershing Square Capital Management is the largest common shareholder in both companies, holding over 210 million shares combined. The timing raised questions as Monday marked the final trading day of Q1 2026, when stock prices appear in hedge fund performance reports. Despite the rally, both stocks remain down nearly 60% from September 2025 peaks. The bullish case relies on potential privatisation under the Trump administration, though no decision has materialised. Critics warn rushed privatisation could raise borrowing costs and recreate conditions that fuelled the Great Recession.