Buying or Selling a Condo

Your Condo Isn't the Only Thing a Buyer Has to Qualify For

When most people think about qualifying for a mortgage, they think about the buyer: income, credit score, down payment and debt.

With a condo, there's another piece that can be just as important.

The condo project itself may have to qualify.

That means the financial health of the HOA, insurance coverage, reserves, assessments, major repairs and other issues within the community can potentially affect whether a buyer is able to obtain conventional financing.

And recent changes from Fannie Mae have made understanding this even more important.

What Changed in August 2026?

Effective for loan applications dated on or after August 3, 2026, Fannie Mae retired its Limited Review process.

Previously, certain qualifying condo purchases could go through a Limited Review, which generally involved a less extensive evaluation of the condo project.

Now, when a project review is required, many loans that previously may have qualified for Limited Review instead need to satisfy Fannie Mae's Full Review requirements.

There are important exceptions. For example, project review is generally waived for two- to four-unit condo projects and for five- to ten-unit projects that are not part of a larger development or master association. An attached five- to ten-unit project that is part of a larger development or master association generally requires Full Review.

So the change isn't as simple as saying, "Every condo with more than 10 units now needs a Full Review."

The bigger takeaway is that Limited Review is gone.

What Does a Full Review Actually Look At?

This is where condo owners should pay attention.

A Full Review goes beyond the individual unit. The lender evaluates the project and HOA to determine whether it meets Fannie Mae's eligibility requirements.

Depending on the project, lenders may need to review information involving the HOA's budget and reserves, insurance, delinquent assessments, major repairs, deferred maintenance, financial condition and other project documentation.

In other words, you could have a beautiful condo, a qualified buyer and an agreed-upon price — and still encounter a financing issue because of something happening at the HOA level.

Why This Matters If You Own a Condo

This is especially important for people who own condos as second homes or investment properties.

You may not follow every HOA meeting or read every set of minutes because you aren't planning to sell today. But decisions being made by your HOA can eventually affect the marketability of your property.

A major deferred-maintenance issue, insufficient reserves, insurance problems, significant assessment delinquencies or certain project eligibility issues can create additional hurdles when a future buyer applies for financing.

And when financing options become more limited, your potential buyer pool can become more limited too.

That is why I believe condo owners should understand what's happening within their HOA well before they put their property on the market.

Buyers Should Be Reviewing the HOA, Too

If you're buying a condo, don't look at the HOA documents as just another stack of paperwork to get through during escrow.

They can tell you a tremendous amount about what you're actually buying into.

I want to know: How healthy are the reserves? Are dues increasing? Are special assessments being discussed? Are there major projects coming up? Is there deferred maintenance? Are there insurance concerns? What has the board been discussing in recent meetings?

You're not simply buying the space inside the walls. You're buying into the financial and physical health of the entire community.

Why Having the Right Agent Matters

This is one of those areas where real estate goes far beyond finding a property, writing an offer or putting a home on the MLS.

Condo transactions require an agent who understands what questions to ask, what documents matter and when something in the HOA paperwork needs further investigation.

For sellers, that can mean identifying potential financing concerns before the home hits the market instead of discovering them after you're already in escrow.

For buyers, it means digging into the HOA early enough to understand what you're purchasing and working closely with the lender when project eligibility questions arise.

Rules change. Lending guidelines change. HOA circumstances change.

Your agent should be paying attention to all three.

The Bottom Line

If you own a condo in Orange County — particularly an investment property or second home you may sell in the future — don't wait until you receive an offer to start thinking about your HOA's financial health and lending eligibility.

And if you're buying a condo, determining whether you personally qualify for the loan is only part of the equation. Understanding whether the condo project meets your lender's requirements can be equally important.

The more you know before entering escrow, the fewer surprises you're likely to face once you're in it.