In 66 days, the bar for financing a condo with a conventional loan goes up. For loan applications dated on or after January 4, 2027, Fannie Mae and Freddie Mac will want a condo association’s budget to send at least 15% of its assessment income to replacement reserves. Today the minimum is 10%. The change was announced on March 18, 2026, in Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C, and it lands at the same time Florida condo budgets for 2027 are being written.
That timing is the whole story for owners. The number that decides whether a buyer can get a normal loan on your unit next year is being set at a board meeting this fall. This guide explains how the test works, shows the math on two example buildings, puts it next to what our Florida listing data says about condos right now, and lists what owners, buyers and sellers can do before January. If you want to run your own building’s numbers, the Florida condo 15% reserve rule checker does it in a minute.
What the 15% reserve rule says
When a lender makes a conventional loan on a condo unit and sells it to Fannie Mae or Freddie Mac, the building has to meet the agencies’ project standards. One of those standards is reserve funding. The lender reads the association’s current budget and divides the annual contribution to replacement reserves by the annual assessment income. That ratio has to be at least 10% today. For applications dated on or after January 4, 2027, it has to be at least 15%.
There is a second way to pass. If the association has a reserve study that was completed or updated within the last three years, and the budget funds the study’s highest recommended level, the percentage test does not apply. The agencies rule out baseline funding, the lowest level a study can show, for this purpose. According to the Community Associations Institute’s summary of the announcement, that is the full exception: a current study, funded at its top tier.
The reserve rule is one piece of a larger reset of condo lending this year. The same March announcements removed the 50% limit on investor-owned units for established projects, capped the master-policy deductible at $50,000 per unit starting July 1, 2026, and retired the Limited Review for loan applications dated on or after August 3, 2026. Since August, most buildings with more than 10 units get a full review of the budget, insurance, litigation and repairs before a conventional loan closes. The 15% test is the next step on that path.
How the math works, with two example buildings
The top of the fraction is the reserve line in the budget. The bottom is assessment income, meaning the money the budget expects from owners’ regular fees. GoverningDocs, in a September 10, 2026 walkthrough of the Selling Guide, points out that the guide lets a lender leave some income out of the bottom: incidental income the building does not rely on (laundry, clubhouse rentals, vending), utilities owners would normally pay themselves (bulk cable and internet), income that is already allocated to reserves through a separate line, and special assessment income. Excluding those lines raises the percentage. In its example, the same 120-unit budget scores 13.6% against total income and 15.3% once those lines come out. Same building, different answer, depending on which lines the lender removes.
Here is a simpler example. Take a 120-unit building where the average fee is $650 a month. Assessment income is 120 × $650 × 12 = $936,000 a year. The board budgets $95,000 for reserves. That is 10.1%, which passes today and misses in January.
| Example building | 120 units at $650 | 40 units at $480 |
|---|---|---|
| Annual assessment income | $936,000 | $230,400 |
| Annual reserve contribution | $95,000 | $20,000 |
| Reserve share today | 10.1% | 8.7% |
| Meets 10% test (today) | Yes | No |
| Meets 15% test (from Jan. 4, 2027) | No | No |
| Reserves needed for 15% | $140,400 | $34,560 |
| Gap, if moved from other budget lines | $45,400 a year | $14,560 a year |
| Gap, if paid with a dues raise | $53,412 a year | $17,129 a year |
| Dues raise per unit per month | about $37.09 | about $35.69 |
The last two rows are where boards get tripped up. If the association pays for the gap by raising dues, the raise is new assessment income, so the bottom of the fraction grows as the top does. To land at exactly 15%, the raise has to be the gap divided by 0.85. For the 120-unit building, moving $45,400 out of landscaping, management or other lines would do it. Raising dues to cover it takes $53,412 a year, about $37 a unit each month, taking the average fee from $650 to about $687.
For a buyer, that $37 is real money in a different way. At the October 29, 2026 Freddie Mac average 30-year rate of 7.24%, $37 a month is the payment on about $5,400 of mortgage. Lenders count association dues in your debt-to-income ratio, so a dues increase trims buying power in the same way a higher price does. It is smaller than most people fear, and smaller than one special assessment, which is the point the next section makes.
Why it matters more in Florida than almost anywhere
Florida owners already live with two reserve systems. State law, after the 2022 Surfside reforms, requires a structural integrity reserve study (SIRS) for condo buildings three or more habitable stories tall, covering the roof, load-bearing structure, fireproofing, plumbing, electrical, waterproofing and windows. For budgets adopted after December 31, 2024, an association cannot waive or underfund those components. HB 913, effective July 1, 2025, added flexibility, including a pause on reserve contributions for up to two budgets after a milestone inspection while the association pays for the repairs. Our Florida condo buying guide lays out each of those changes with dates.
The state rules and the agency rule measure different things. The SIRS is about specific building components. The 15% test is about the whole budget. A building can fund its SIRS on schedule and still miss 15% if the SIRS items are a small part of a large operating budget, and a building in an HB 913 pause can show a reserve line that looks very low for two budget years. If your building is in a pause, ask the board how it plans to handle the January lender test, because the pause and the 15% minimum point in opposite directions.
There is also the market. Nationally, ICE data reported by CNN on October 26, 2026 shows condo prices trailing single-family prices in 99 of the 100 largest U.S. markets. That report names no Florida figures, so we checked our own. Across the active listings in our Florida MLS map feeds on October 30, 2026, condos are taking longer to sell than houses on every measure we track:
| Active Florida listings, Oct. 30, 2026 | Condos | Single-family | Townhouses |
|---|---|---|---|
| Active listings in our map feeds | 18,614 | 33,334 | 4,448 |
| Median list price | $360,000 | $499,900 | $365,000 |
| Median days on market | 84 | 63 | 69 |
| Share listed 90 days or more | 48.1% | 38.8% | 41.5% |
| Share listed 180 days or more | 25.4% | 15.8% | 17.4% |
Source: Momentum Realty analysis of active listings in its Florida MLS map feeds (Georgia excluded), October 30, 2026. Listing data is deemed reliable but not guaranteed and changes daily; the feeds do not include every Florida listing.
One condo in four has been on the market six months or more. A building that cannot offer buyers a conventional loan after January 4 narrows its buyer pool to cash and portfolio loans, usually at higher rates with larger down payments. In a market where condo listings already sit, that is the difference between a slow sale and a stalled one. We looked at the price side of the same split in Houses Hit Records While Condos Fall.
Why this fall’s budget meeting is the one that counts
Most Florida condo associations run on a calendar fiscal year, so the 2027 budget is proposed and adopted in the last months of 2026, with notice to owners before the meeting. A lender reviewing a loan application dated in January, February or March 2027 will usually be reading that budget. If it sends 12% to reserves, every buyer who needs a conventional loan in the first part of 2027 is reviewed against a 15% minimum the building does not meet, unless the reserve study exception applies.
The fix is cheaper before the budget is adopted than after. Moving money between lines, or adding a reserve-only increase, is a budget decision. After adoption it usually means an amended budget or a special assessment, which buyers and lenders read as a warning sign. If you own a unit, the question to ask at this fall’s budget meeting is direct: what percentage of assessment income does the proposed 2027 budget send to reserves, and does it meet the 15% minimum or the reserve-study exception?
What to do, by situation
If you own a condo and might sell in 2027
- Get the proposed 2027 budget and divide the reserve line by assessment income, or put both numbers into the reserve rule checker.
- Ask about the reserve study. When was it completed or last updated, and does the budget fund its highest recommended level? A study older than three years does not qualify for the exception.
- Ask for the latest lender questionnaire the association filled out. It shows how lenders see the building now and is the first document a buyer’s lender will request.
- Know what the unit would sell for under both outcomes. A no-cost home value review from a Momentum agent can price your unit against recent sales in your building and nearby ones.
If you are buying a condo
- Plan for the date on your loan application. An application dated January 4, 2027 or later is reviewed against 15%. Ask your lender which test applies before you write the offer.
- Read the budget before the contract, not after. Florida resale buyers get seven business days to cancel after receiving the association documents, but a failed project review can take longer than that to surface. Put a financing contingency in the contract.
- Price the whole carrying cost. Dues, the HO-6 policy, the master-policy deductible gap and any pending special assessment all belong in the monthly number. The Florida buyer closing costs calculator and our breakdown of Florida HOA fees by county help with that.
- Check exposure to assessments with the condo special assessment risk checker, and see what a condo special assessment is if the term is new.
If you sit on the board
- Run both versions of the math: reallocating within the budget, and a reserve-only dues increase divided by 0.85.
- Price an updated reserve study against the dues increase. If the study can be funded at its highest recommended level, it may be the cleaner path.
- Tell owners early. A $37 monthly increase explained in October lands differently than a special assessment in March.
What we do not know yet
A few points are still open, and owners should hear them plainly. The agency announcements do not define every term: industry commenters have asked whether threshold funding plans count as the highest recommended level, and whether insurance costs billed outside the budget change the calculation. Lenders also have discretion over which income lines to exclude, so two lenders can reach different answers on the same budget. And Florida’s SIRS is not automatically the same thing as the reserve study the agencies describe; whether a given SIRS satisfies the exception is a lender call. When it matters, get the answer in writing from the lender handling the loan.
Frequently asked questions
What is the 15% condo reserve rule?
It is the Fannie Mae and Freddie Mac minimum share of a condo association’s annual assessment income that must be budgeted to replacement reserves before the agencies buy a conventional loan on a unit in that building. It rises from 10% to 15% for loan applications dated on or after January 4, 2027.
When does the 15% reserve requirement start?
It applies to loan applications dated on or after January 4, 2027. Fannie Mae announced it in Lender Letter LL-2026-03 and Freddie Mac in Bulletin 2026-C, both on March 18, 2026.
Can a Florida condo pass without 15% in reserves?
Yes, if the association has a reserve study completed or updated within the last three years and its budget funds the study’s highest recommended level. Baseline funding does not qualify. Whether a Florida structural integrity reserve study meets that requirement is the lender’s decision.
How much would dues go up to reach 15%?
It depends on the gap. If the association pays for it with a reserve-only dues increase, the increase has to equal the shortfall divided by 0.85, because new dues also count as assessment income. In our 120-unit example at $650 a month, that is about $37 a unit each month.
Does the 15% rule apply to FHA and VA loans?
No. It is a conventional loan rule from Fannie Mae and Freddie Mac. FHA and VA approve condo projects under their own standards, which buyers should check separately.
What happens if my building misses 15%?
Units can still be sold, but buyers who need a conventional loan may be limited to portfolio lenders, usually at higher rates with larger down payments, or to cash. The board can fix it in the next budget or by funding an updated reserve study at its highest recommended level.
Sources
- Community Associations Institute, “What Fannie Mae & Freddie Mac’s Latest Policy Changes Mean for Condominium Associations, Lenders, and Homeowners,” summarizing Fannie Mae Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C, March 18, 2026: advocacy.caionline.org
- GoverningDocs, “The Fannie Mae 15% Reserve Rule, Explained With the Actual Math,” September 10, 2026: governingdocs.dev
- Freddie Mac Primary Mortgage Market Survey, 30-year fixed average 7.24%, week of October 29, 2026: freddiemac.com/pmms
- ICE Mortgage Monitor data as reported by CNN, October 26, 2026 (national; no Florida figures).
- Momentum Realty analysis of active listings in its Florida MLS map feeds, October 30, 2026. Deemed reliable but not guaranteed.
- Florida Statutes chapter 718 and HB 913 (2025), as summarized in our Florida condo buying guide.
How this article was prepared: the rule details come from the agency announcements as summarized by the sources above; the two example buildings use round numbers to show the arithmetic and are not real associations; the listing figures are counts and medians from our MLS map feeds on the date shown. Nothing here is a loan approval, a project review, legal advice or a value for any unit. Confirm current guide language with your lender.