Buying a condo used to feel pretty straightforward.
Do you like the unit? Can you afford the payment? Is the HOA fee reasonable?
Now there’s another question that matters a lot more:
Is the condo project itself financially healthy enough to finance?
That can affect whether a buyer gets a loan, how many buyers a seller can attract, how long a condo sits on the market and, ultimately, what it’s worth.
And the rules changed in 2026.
What changed?
One of the biggest changes took effect August 3, 2026.
Fannie Mae retired the old Limited Review process, which was basically a lighter condo approval. More projects now have to go through a deeper review of the HOA’s finances, reserves, insurance and property condition.
Reserve requirements are also getting stricter.
A reserve study is simply a plan that estimates how much money an HOA should be setting aside for future big-ticket expenses like roofs, paving, elevators, plumbing and structural repairs.
And beginning January 4, 2027, condo projects going through Full Review will generally need to budget at least 15% of annual assessment income toward reserves, up from 10%.
That does not mean every HOA is suddenly raising dues by 5%.
But communities that have been running on skinny reserves may need to make changes.
Higher dues. A special assessment. Delayed projects. Or some combination of the three.
Some things are getting easier too
This is not all bad news.
Smaller condo projects — generally 10 units or fewer — may have more opportunities to skip the full project review.
Fannie Mae also removed an old investor-concentration limit for established condo projects. That means a community with a lot of rental units is no longer automatically a conventional financing problem simply because too many units are investor-owned.
So this is not simply a story about condo financing getting harder.
Lenders are paying more attention to whether the HOA itself is financially healthy.
That can help strong communities and expose weaknesses in others.
A few condo lending terms you may hear
These terms get tossed around a lot, so here’s the plain-English version.
Limited Review / Full Review
These are conventional-loan review terms used by Fannie Mae and Freddie Mac. Limited Review was the lighter version. It has now been retired, so more condo projects may get a deeper Full Review.
Warrantable condo
This simply means the condo project meets Fannie Mae or Freddie Mac’s requirements for standard conventional financing.
The buyer has to qualify for the mortgage, and the condo project has to qualify too.
Non-warrantable condo
This means the project does not meet those conventional guidelines.
It does not mean the condo is unsellable. A buyer may still have other options, including cash or certain portfolio loans. FHA or VA financing may also be possible if the property separately meets those programs’ rules.
FHA and VA approval
These are separate from Fannie Mae and Freddie Mac. FHA and VA have their own condo approval requirements, so the change from Limited Review to Full Review does not directly determine FHA or VA eligibility.
If you’re buying
You are not just buying the condo.
You are also buying into the HOA.
That means the financial condition of the association matters almost as much as the condition of the unit.
A remodeled kitchen is great.
A remodeled kitchen in a community with no money saved for a 25-year-old roof? Less exciting.
Before getting too attached to a condo, find out:
- Does the HOA have healthy reserves?
- Is there a current reserve study?
- Are major repairs coming?
- Are there current or planned special assessments?
- Has the HOA recently raised dues?
- Is the project adequately insured?
- Have conventional loans been closing in the community?
You do not need to become an HOA accountant.
But your lender and agent should be asking these questions early.
Get the lender involved sooner
This is important.
You can have great credit, plenty of income and a solid down payment — and still have trouble getting the loan because of the condo project.
So if you’re serious about a particular community, get your lender looking at the project early.
Finding out three weeks into escrow that you qualify but the building doesn’t is not ideal.
If you’re selling
Sellers have a different problem.
You may have a beautiful unit, but if the HOA has weak reserves, insurance problems, deferred maintenance or an upcoming assessment, your buyer may have difficulty getting financing.
That means condo sellers should do some homework before listing.
Ask the HOA or management company for:
- the current budget,
- reserve information,
- the latest reserve study,
- insurance information,
- current or upcoming special assessments,
- and any known major repair issues.
You are not trying to guarantee that every lender will approve the project.
You are trying to avoid surprises.
If there is a problem, it is much better to understand it before you accept an offer.
Why this matters even more in today’s Phoenix condo market
The condo market is not behaving the same at every price point.
For Greater Phoenix condos under $500,000, the current 12-month moving average sales price is about $253.58 per square foot.
That is down from the 2023 peak.
Inventory is higher than it was during the ultra-tight 2022–2024 market, and sales are still well below the levels we routinely saw before 2022.
In plain English:
Buyers have more choices.
And buyers in this price range tend to be very sensitive to monthly payment.
With a condo, the real payment is not just the mortgage.
Mortgage + taxes + HOA + insurance + possibly an assessment.
So even a $100 or $150 increase in HOA dues can matter.
Above $500,000, the market looks very different. The current 12-month moving average is around $499.42 per square foot, and the higher-end segment has been much more resilient.
That does not mean an expensive condo gets a free pass on HOA problems.
It just means the market pressure is different.
Where are the opportunities?
Buyers may have more negotiating room
Especially under $500,000, buyers generally have more choices than they did a few years ago.
That can mean better pricing, seller concessions, help with closing costs or simply enough breathing room to properly investigate the HOA.
The opportunity is not necessarily finding the cheapest condo.
It may be finding the best-run community.
A slightly more expensive condo in a financially healthy HOA may be a much better buy than a cheaper unit with low reserves and a big assessment coming.
Strong HOAs may become more valuable
For years, buyers loved seeing low HOA dues.
Low dues can be great.
Unless they are low because nobody has been saving enough money.
A well-run community with solid reserves, good insurance and responsible maintenance may become increasingly attractive to buyers and lenders.
That can be a real advantage for sellers.
Sellers in strong communities have something worth marketing
If your HOA is well run, that matters.
Healthy reserves, good maintenance and solid insurance are not nearly as exciting as a remodeled kitchen, but they may make your condo easier to finance and easier to sell.
That is worth pointing out.
Cash buyers may find opportunities — but be careful
If a condo project has financing problems, a cash buyer may face less competition.
That can create opportunity.
But financing trouble is often a symptom of something bigger.
Weak reserves. Deferred maintenance. Insurance problems. Assessments.
So if a lender will not finance the project, the first question should not be:
“Can I get a deal?”
It should be:
“Why won’t they finance it?”
The simple takeaway
If you are buying a condo, look beyond the unit.
If you are selling one, look beyond your own four walls.
The HOA’s finances, reserves, insurance and maintenance are becoming a bigger part of the value equation.
The easiest way I know to say it is this:
You are not just buying the condo. You are buying the HOA too.
And if you are selling?
Your buyer is evaluating both.