Fannie Mae, Freddie Mac announce revisions to condo insurance standards Updates include investor concentration limits, a limited review process, and expanded waivers of project review

Here’s a clear breakdown of what’s actually happening with the new Fannie Mae / Freddie Mac condo insurance + project review changes (March 2026) and what it really means:

🧩 Big Picture

These updates from the Federal Housing Finance Agency (FHFA) are aimed at:

Lowering insurance costs

Making more condos eligible for financing

Addressing the insurance crisis (especially in states like Florida)

👉 Net effect: More condos will qualify for conventional loans again and monthly payments may improve.

🔑 Key Changes Explained
1. 🏢 Investor concentration limits — REMOVED

Previously: ~50% cap on investor-owned units in many cases

Now: That limit is eliminated (for full reviews)

👉 Impact:

Easier financing in investor-heavy condos

Opens up deals that were previously declined

2. 📋 Limited review process — ELIMINATED

The old “limited review” shortcut is going away

Replaced by:

Full review OR

Waiver of project review

👉 Impact:

More documentation required in many deals

Could slow some transactions

BUT improves risk oversight of condo projects

3. 🧾 Expanded waiver of project review

Now applies to projects with up to 10 units (previously smaller scope)

👉 Impact:

Huge win for:

Small condo buildings

Non-warrantable deals that can now pass

4. 🏝️ Florida-specific rule — REMOVED

No more mandatory PERS review for new attached condo projects in Florida

👉 Impact:

Speeds up approvals in Florida

Big deal for your local market

5. 🛡️ Insurance changes (THIS is the headline driver)
Roof coverage flexibility

Now allowed:

Actual Cash Value (ACV) on roofs

Still required:

Replacement Cost Value (RCV) on rest of property

👉 Translation:

Roof doesn’t have to be insured “brand new”

This dramatically lowers premiums

Other insurance simplifications

Removed strict replacement cost documentation rules

Dropped inflation guard requirement

Simplified deductible rules

👉 Impact:

More HOAs can comply

Fewer deals were killed over insurance technicalities

6. 💰 Stronger reserve requirements (important hidden change)

Reserve funding requirement increasing:

From 10% → 15% (effective 2027)

👉 Impact:

Better long-term condo stability

BUT:

Higher HOA dues likely

More scrutiny on associations

⚖️ What This Means in the Real World
👍 Positives

More condos become financeable

Lower insurance costs → lower monthly payments

Fewer “non-warrantable” deal killers

Big relief in high-cost insurance markets (like Florida)

⚠️ Trade-offs

More full reviews = more paperwork

HOAs face:

Higher reserve requirements

More financial scrutiny

tune in and learn https://www.ddamortgage.com/blog

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