Insurance & Condo/Co-Op Changes

Friday, March 20th, 2026 at 4:41pm

Fannie Mae and Freddie Mac announced the following changes that both ease and tighten how we underwrite insurance, condominiums, and co-ops.

Here’s what is easier, and this is effective now on conventional conforming financing:

2-10 unit condominium associations – in most cases we’ll no longer need a condominium questionnaire nor need to review the budget. This was previously limited to 2-4 unit associations. We still must verify sufficient insurance coverage.
There are no longer owner occupancy (investor ratio) limits for existing condo associations. Co-ops will still require 50%+ owner occupancy.
Insurance:
1. Applicable on all property types including houses: The insurance requirements have been that a property must have replacement cost coverage, which would completely rebuild the property in the event of a total loss. But now, Fannie Mae and Freddie Mac are allowing a roof to have actual cash value coverage, and the rest of the structure have replacement cost coverage. Actual cash value is lesser coverage, and lesser cost, because it’s coverage for the current (depreciated) condition of the roof.
2. Condos/Co-ops: We no longer need to verify whether there is inflation guard coverage [which raises coverage with inflation]. This was something that many buildings were previously required to add, to comply.

Here’s what will be tightened, in the future

Beginning August 3, 2026: Underwriting under a “limited review” will no longer be possible. The link has more information, but primarily losing the ability to do limited reviews makes it so:
1. We’ll be required to do more scrutiny on a condo or co-op’s budget, including verifying the reserve contribution is sufficient.
2. We’ll be required to verify the number of unit owners delinquent on condo or co-op dues, and no more than 15% unit owners can be 60+ days past due.
Beginning in 2027, in almost all cases, condo and co-op budgets will need a minimum 15% contributed toward reserves. This is up from 10%. We will still be obligated to verify 15% is sufficient, and verify a condo or co-op is financially stable

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