Before you buy or sell a condo, Here's what you need to know

If you’re thinking about buying or selling a condominium, there’s an important change happening behind the scenes that could impact your transaction.

Fannie Mae and Freddie Mac, the two government-sponsored entities that back many conventional mortgages, have tightened their guidelines for condominium communities. Their goal is simple: make sure buildings are financially healthy and properly maintained before they approve financing.

So what does that mean for buyers and sellers?

Condo Associations Are Under More Scrutiny

Today’s lenders are taking a much closer look at the financial health of a condominium association, not just the individual unit.

They may review things like:

• Whether the association has adequate reserve funds for future repairs

• The condition of the building and whether there are significant maintenance issues

• Pending special assessments

• Insurance coverage

• Reserve studies and long-term maintenance planning

A building that appears perfectly fine on the surface could still face financing challenges if its financials or maintenance history raise concerns.

Why This Matters

If a condo community doesn’t meet these lending guidelines, some buyers may not qualify for conventional financing.

That means:

• A smaller pool of qualified buyers
• Potential delays during the mortgage process
• In some cases, a transaction that cannot move forward until issues are resolved

For sellers, that can directly affect marketability.

For buyers, it makes due diligence more important than ever.

Don’t Judge an HOA by Its Monthly Fee

Many buyers naturally gravitate toward communities with lower HOA fees.

But lower isn’t always better.

Some associations have kept monthly dues low by delaying maintenance or underfunding their reserve accounts. While that may seem attractive in the short term, it can lead to larger problems down the road, including special assessments, deferred repairs, or financing challenges.

Sometimes, a community with slightly higher monthly dues is actually in a much stronger financial position.

Questions Every Condo Buyer Should Ask

Before purchasing a condo, it’s worth understanding:

• Is the association financially healthy?
• Are reserve funds adequately funded?
• Are any major repairs planned?
• Are there pending special assessments?
• Has the building experienced significant maintenance or structural issues?
• Is the community likely to qualify for conventional financing?

These questions can be just as important as the number of bedrooms or the updated kitchen.

The Bottom Line

A condominium purchase isn’t just about buying a home. You’re also becoming part of a homeowners association, and the financial health of that association matters.

Whether you’re buying your first condo, selling your current one, or simply wondering how these changes could affect your property’s value, having the right information can make all the difference.

As always, if you’re considering a move, I’m happy to help you understand how these evolving lending guidelines may impact your specific situation before you list your home or make an offer.