New condo rules just took effect - what does that mean for you?

On August 3, 2026, Fannie Mae and Freddie Mac eliminated the "Limited Review" and "Streamlined Review" options that let roughly 40% of condo loans skip a deep look at a building's finances. Except for small buildings (10 units or fewer), every condo project now needs a Full Review — covering reserves, insurance, special assessments, repair history, and any pending litigation. A second change lands January 4, 2027: the required reserve funds jump from 10% to 15% of the annual budget. What does that mean for those of us in Chicago or the suburbs? Well, around 60% of condo buildings in Chicago may come under extra scrutiny!

The reason for this change is the 2021 Surfside, Florida condominium collapse, which pushed federal regulators to demand tighter examination of aging or under-funded buildings before backing loans on them.

For buyers:  Expect a longer path to closing. Even a well-qualified buyer can see a deal collapse if the building — not the buyer — fails review. HOA fees might go up to cover the extra reserves needed. Buildings could tack on new Special Assessments to complete these repairs. So talk to me first because I work with lenders who can verify if a unit in the building can qualify for a loan and ensure there are no surprises.

For sellers: Get ahead of it. Associations that can't produce clean financials or have deferred maintenance may scare off financed buyers entirely.  The units in your building can only be sold to CASH buyers at that point and will significantly reduce the buyer pool and the asking price. Sellers should ask their HOA board for the latest reserve study, insurance certificate, and budget now, and ask the agent to share it proactively as part of the MLS listing details — buildings that pass review quickly will sell faster than ones that leave buyers guessing. Rising reserve requirements next year may also mean higher HOA dues, so it's worth factoring it into pricing conversations. Disclose everything you know to protect yourself.

Bottom line: condo transactions just got more paperwork-heavy on both sides. A little preparation now avoids a stalled closing later. Knowledge is POWER. Hire an agent like me who can prepare you before you fall in love with a condo.

Dakshi Anand is a luxury real estate broker at Compass in Naperville, IL, with over a decade of experience serving the Southwest Suburbs of Chicago. 📞 (630) 362-0337 | [email protected] | homesbydakshi.com