New Mortgage Guidelines for Condominiums Take Effect in 2026 and 2027.

Condo kitchen

On March 18, 2026, Fannie Mae (Federal National Mortgage Association), which backs the conventional loans most frequently obtained for condo financing throughout the country, announced numerous changes to its guidelines.  Some may be a relief, such as the removal of the 50% investor cap (how many investors can own in an HOA), but others are more restrictive. One of the major changes is the increase from 10% to 15% reserve fund allocation in the HOA budget, effective January 4, 2027. Ten percent allocation has been a standard for many many years, but the increase to 15% means a possible increase in dues assessments. To avoid that situation as much as possible, Boards need to start planning now for next year's budget process.

What boards and property managers should do right away*

Below is a practical checklist to assist you in developing your strategy for the next few weeks:

• Calculate your current reserve allocation percentage from your annual budget
• Determine when your last reserve study was completed. If it has exceeded thirty-six (36) months or utilized baseline funding options instead of full funding options, commission a new study
• Verify your master insurance policy provides replacement cost coverage for everything excluding roofs
• Prepare a condo questionnaire packet for lenders in advance of anticipated sales
• If your association's reserve funds are currently below fifteen percent (15%), model out your options: higher dues, special assessment, or a reserve fund loan
• If your building was previously deemed non-warrantable due to investor concentration limits, confirm your building's eligibility with a lender.
• Action Item:  Find your annual budget line item for reserve contributions. Divide it by your total operating expenses. If your resulting percentage is below 15%, start developing a plan before January 2027.  
• *https://www.hoaloanservices.com/post/fannie-mae-freddie-mac-condo-guideline-changes-2026-2027-hoa-guide   

So what if an HOA does not meet these guidelines and a seller receives an offer from a buyer using a conventional loan? That buyer will not be able to finance the condo with that conventional loan, but may be able to buy with all cash, or use an FHA loan or a VA loan (if they qualify).  Buyers do buy with those options too, but a conventional loan is often preferred because it is not a government backed loan and is offered by mortgage companies, credit unions,  and banks, thus offering more borrowing options for the buyer. 

In the last year, 705 condo units in Long Beach sold per the CRMLS: 373 were sold by conventional loans; 149 sold by cash; 48 sold with FHA financing; 35 sold with VA financing; the remaining 100 sold through other types of financing.  But, as you can see the largest amount were sold by conventional loans! 

I have over 30 years' experience in selling residential properties, including condos. Please contact me for market information in all Long Beach areas, and nearby cities. For more information on these new guidelines, contact an experienced conventional mortgage professional who is  familiar with the condo market. 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

California Mid-Year Updates for Memorial Day

Memorial Day flags in Monrovia

Happy Memorial Day for 2026. This holiday is an annual reminder of how important it is to protect our freedoms, and reflect on and remember all those who have sacrificed for it. 

Updates:

1. In Los Angeles County the ban on wildfire rent gouging (10% cap) is set to expire on May 29, 2026 after the Board of Supervisors voted against a final extension.  The rental prices revert to the existing rules under the California Tenant Protection Act of 2019, which caps annual rent increases at 5% plus local inflation. There may be additional rules affecting your property, depending on your city and county location, so check with your property manager or your local housing board first.

2. Artificial Intelligence (AI) is making headway into the market, including real estate.  CAR is in the process of developing guidelines for Realtors concerning the use of AI in their practice, transactions, and listings. AB 723 requires transparent disclosure concerning any digitally altered images used in marketing, advertising, listings on the MLS, including those involving the use of AI.  Read the new changes to the Business and Professions Code.

3. In April, HUD sent out a letter to fair housing associations and real estate professionals stating it is not a violation of the Fair Housing Act to share information about schools and neighborhood crime rates with clients. It may sound simple, but Realtors have long been cautioned on this in the past because sometimes descriptions can become subjective, or sound that way.  National Association of Realtors states in response:

"The National Association of REALTORS® (NAR) agrees that consumers seeking information about neighborhood schools and crime should have access to accurate and complete data during their home search. Consistent with this position, NAR’s Code of Ethics and Standards of Practice explicitly allow members to share neighborhood demographic information, as long as it is not racial, ethnic, or religious. Since the 1980s, NAR guidance has encouraged members to share objective, factual information about schools and crime, provided by a reliable third-party source. At the same time, NAR has advised caution about the way these topics are discussed. Subjective commentary, personal opinions, or hearsay about schools or crime have been cited as evidence of discriminatory intent and intentional steering in numerous fair housing legal cases."

My approach has almost always been to provide resources where buyers--who want to know more about an area--may look and investigate, i.e, local police department website, other online crime data, and school resource websites. 

 4.  Condo Owners or Future Buyers: After the devastating collapse of the Florida condominium structure in 2020, condominiums have increasingly been in the eye of insurance companies and lenders. FNMA, which provides the guidelines for conventional mortgages nationally, has new requirements, some of which are in effect now, and others in effect as of  early 2027.  Most visible is the requirement for increase annual budget reserve from 10% to 15%, this will be in effect January 4, 2027, which means Boards of Directors need to complete their budgets by that time.  Lenders on FNMA conventional loans (most of the conventional loan market) must now collect HOA governing documents, financial statements and budgets, reserve studies and insurance certificates as part of their lender approval process for the buyers. These are only part of the new requirements-- the good news is that FNMA has also loosened up on some guidelines, i.e., no restriction on number of investors. Why is this so important? If you want to sell your condo and a buyer with an approved conventional loan presents an offer, their lender will need to meet all these guidelines, or you may have to wait for another buyer with a different type of loan. In the last 6 months and in the last year, more than 50% of condos sold in Long Beach as listed in CRMLS were with a conventional loan (161 out of 291 and 364 out of 668, respectively).

If you are interested in attending a Zoom meeting in the future with a major lender about these changes, please contact me and I will keep you notified of this opportunity. See my  contact information below.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996