What Changed in Fannie Mae and Freddie Mac Rules for Buyers in 2026?

Four Fannie Mae and Freddie Mac rule changes from 2026 affect what you can buy and how fast you can close in Columbus, and the one that bites first is the condo rule. Since August 3, every conventional loan on a condo in a building with more than ten units gets a Full Review of the association's books. On January 4, the reserve minimum goes from 10 percent to 15 percent of the association's budget. Ohio law only asks for 10 percent. Add a $50,000 cap on the master policy deductible and a new appraisal report on November 2, and the lender you pick matters more than it did a year ago.

I read the source documents themselves for this, Fannie Mae's Lender Letters and Selling Guide announcements, not the summaries going around. Fannie Mae states in each one that the change is in alignment with Freddie Mac. Each change below comes with its effective date and what it does to a purchase.

What Changed for Condo Loans?

Until this summer, most condos in established buildings could be financed under a shortcut called Limited Review. The lender checked the unit and the borrower and skipped most of the analysis of the building. Lender Letter LL-2026-03, dated March 18, 2026, retired it. Lenders were allowed to stop using it right away, and they had to stop for every loan application dated on or after August 3, 2026.

What replaces it is Full Review, or a waiver for small buildings.

Change	What it means	Effective
Limited Review retired	Condo projects with more than ten units need a Full Review of budget, reserves, insurance and litigation	Applications dated on or after Aug. 3, 2026
Waiver of Project Review expanded	Projects with ten or fewer units can skip the project review, as long as a five to ten unit project is not part of a master association or larger development	Immediately (March 18, 2026)
Investor limit retired	The 50 percent cap on investor-owned units in established projects is gone for Full Review	Immediately
Reserve study tightened	If the budget falls short and a reserve study is used instead, the budget must fund the study's highest recommended amount, and the baseline funding method no longer counts	Applications dated on or after Aug. 3, 2026
Reserves raised	Minimum reserve allocation goes from 10 percent to 15 percent of the annual budgeted assessment income	Applications dated on or after Jan. 4, 2027

Source: Fannie Mae Lender Letter LL-2026-03, March 18, 2026, incorporated into the Selling Guide by announcement SEL-2026-07 on August 5, 2026.

Fannie Mae's letter says why. It reports that since it added critical repair requirements in 2023, it has seen a correlation between condo projects with underfunded reserves and projects that need critical repairs, and that owners in those projects get hit with special assessments that lead to default.

For a buyer, the practical effect is that the building is now underwritten on almost every condo purchase. The budget, the reserve balance, the insurance and any lawsuit against the association all have to pass, and the lender has to collect them from the association before closing.

Why Does the 15 Percent Reserve Rule Matter in Ohio?

Because Ohio's own minimum is lower, and it can be waived.

Ohio condominium associations operate under Ohio Revised Code Chapter 5311. Section 5311.081 requires reserves "in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments," with a floor of 10 percent of the annual budget unless the owners waive it, annually, by not less than a majority of the association's voting power.

Fannie Mae's floor becomes 15 percent for Full Review loan applications dated on or after January 4, 2027.

So an Ohio association can be in full compliance with state law, budgeting exactly 10 percent, or budgeting nothing after a valid owner vote, and still not qualify for a conventional loan in January. The fix for the association is to raise the reserve line in the budget, which usually means higher dues, or to commission a reserve study and fund the highest amount it recommends.

There are 898 condos and townhouses for sale across the seven counties around Columbus as of the October 6 listing feed. 242 of them were built before 1980 and 195 between 1980 and 1999. An older building is not automatically underfunded. It does mean more of the expensive components, roofs, siding, paving and balconies, are closer to replacement, and that is exactly what the reserve line pays for.

If you are shopping condos in the next few months, ask for the current budget on every unit you are serious about and look at the reserve line as a percent of the total assessment income. If it is under 15 percent, ask the association whether the 2027 budget fixes that before you write.

What Changed on Insurance?

Three changes, and one of them affects houses, not only condos.

Change	Rule	Effective
Master policy deductible cap	The per-unit deductible on a condo master policy can be no more than $50,000 for any required peril	Applications dated on or after July 1, 2026
Unit owner policy (HO-6)	Required whenever the master policy has a per-unit deductible, and it must cover at least that deductible	Applications dated on or after July 1, 2026
HO-6 deductible	No more than the greater of 5 percent of the coverage amount or $2,500	Immediately
Roofs	Must be insured, but no longer have to be insured on a replacement cost basis, on one to four unit homes and on master policies	Immediately

Source: Fannie Mae Lender Letter LL-2026-03.

The deductible cap matters because a master policy with a large per-unit deductible quietly moves the cost of a claim onto each owner. If the building has one, your own HO-6 policy has to be big enough to cover it, and that changes your monthly insurance cost.

The roof change is the one most buyers will not hear about. Plenty of insurers will only cover an older roof at actual cash value, which pays the depreciated value and not the cost of a new roof. Fannie Mae used to require replacement cost on the roof. It no longer does. That removes a financing problem on older houses, but it does not remove the cost. If the roof is covered at actual cash value and it fails, the difference is yours. I grew up around residential construction, my dad, my grandpa, my uncle and my great-grandpa were builders, and the roof is one of the first things I look at on any older house we tour. Ask the insurer how the roof will be covered before you write, not after.

What Is UAD 3.6 and When Does It Start?

UAD 3.6 is the new appraisal report. Fannie Mae and Freddie Mac replace the old fixed appraisal forms with one dynamic report, and it is required starting November 2, 2026.

There is an exception. Lender Letter LL-2026-08, dated September 30, 2026, lets a lender that could not get ready in time request permission to keep submitting the old UAD 2.6 report through May 19, 2027. After June 27, 2027 the old format is gone completely. So whether your appraisal comes back on the new form or the old one depends on your lender.

A few things the new report does that matter to a buyer. The appraiser includes bedrooms and bathrooms below grade in the total room counts, while still identifying which level each room is on. A level counts as below grade if any part of it is below grade, so a finished walkout basement is still basement square footage, not above-grade living area. That comes from Fannie Mae's UAD 3.6 Policy Supplement.

An appraiser on the Ohio appraisal coalition board trained our office on the 3.6 report in September. His numbers, which are one appraiser's experience and not a published survey, were longer turn times while the software catches up, around seven to eight business days instead of five, and higher fees, with a median around $750 in a blind survey of Northwest Ohio appraisers. If that holds here, budget more for the appraisal and order it early in the contract. How the appraisal itself works, and what an appraiser is looking at, is in how a home appraisal works in Columbus, and the full list of what you pay to buy is in how much it costs to buy a house in Columbus.

Did Fannie Mae Drop the Minimum Credit Score?

For loans run through Desktop Underwriter, yes. Fannie Mae removed the 620 minimum credit score for loan casefiles created on or after November 16, 2025. Desktop Underwriter now weighs the whole file, credit history, reserves, debt and the property, instead of stopping at a score.

Two cautions. This is not a guarantee of approval at any score. The rest of the file still has to carry it. And an individual lender can set its own minimum on top of Fannie Mae's rules, so one lender saying no is not the final answer. It is a reason to ask a second lender.

Why Does the Lender You Pick Matter More Now?

Every one of these changes moves work onto the lender, and lenders do not all do that work at the same speed.

On a condo, the lender now has to get the association's budget, reserve information, insurance and litigation status and run a Full Review. A lender that orders the condo questionnaire the day your offer is accepted learns in days whether the building qualifies. A lender that waits until underwriting can find out three weeks into a 30 day contract. If the building fails, the conventional loan is off the table and you are looking at a portfolio loan from a bank or credit union that keeps loans in house, often with a larger down payment and a different rate.

On the appraisal, you want to know which report your lender is ordering and how long its appraisers are taking right now.

FHA and VA run their own condo approvals, separate from Fannie Mae and Freddie Mac. If you are using one of those loans, the building generally has to be on that program's approved list, and FHA also allows a single-unit approval in some buildings that are not. That is another reason to check the building first and the unit second.

What Should You Ask Before You Write an Offer on a Condo?

1. The current budget, and the reserve line as a percent of total assessment income. Under 15 percent is a question for January.
2. The reserve study, if there is one, and which funding level the budget uses. Baseline funding no longer qualifies.
3. The master policy deductible per unit. Over $50,000 is a problem, and any per-unit deductible means your HO-6 has to cover it.
4. Pending special assessments and litigation. Both come up in a Full Review and both change what the unit actually costs you.
5. Whether your lender has already reviewed this project, and how it will finance it if the building fails. A good lender answers that in a day.

I covered what condos are listing for around Columbus, including the fee questions, in how much condos cost in Columbus. For where a condo actually saves money against a house, the suburb table there is the place to start. And for what you can carry before you pick a property type, see the salary needed to buy a house in Columbus.

If you have a building in mind, send me the address. I will pull the association budget and the reserve percentage, check the master policy deductible, and find out whether conventional lenders are already financing units there, so you know whether the building qualifies before you write an offer on the unit.

Thinking about buying or selling in Columbus? Let's talk. Contact Adam Geuy at Blacktree Realty.