On August 3, 2026, Fannie Mae and Freddie Mac dropped the shortcut reviews lenders had used to approve established condo buildings. If you finance a Denver condo with a conventional loan in a condo project of more than 10 units, your lender now has to review the whole building's finances, repair needs and insurance, along with your own credit. Your down payment and credit score don't make up for a building that fails.
The Colorado purchase contract already hands you most of the records that review relies on. It also sets your deadline to walk away over those records, and that deadline is a separate date from the one tied to your loan. A buyer who reads those records the way an underwriter would can find out whether the building is likely to pass while they can still cancel over the documents.
The shortcut that closed on August 3
Before this change, many established condo buildings went through Fannie Mae's "Limited Review" or Freddie Mac's "Streamlined Review." Both looked at far less than a full review. Fannie Mae's Lender Letter LL-2026-03, dated March 18, 2026, retired Limited Review for all loan applications dated on or after August 3, 2026. Established buildings now go through a Full Review unless they qualify for a waiver. Freddie Mac made the same change the same day in Bulletin 2026-C.
Both agencies gave the same reason. They have seen a link between condo buildings with thin reserves and buildings that need critical repairs, and they say owners in those buildings can face "unexpected special assessments or higher regular assessments or dues, leading to mortgage default or foreclosure."
Not every change makes buying harder. Under Fannie Mae's guidance, condo projects with 10 or fewer units can now qualify for a waiver of project review. For projects of five to ten units, that applies only if they aren't part of a master association. Fannie Mae also dropped its 50% cap on investor-owned units in established buildings reviewed for investor loans. In Denver, where small condo buildings and duplex-style conversions sit next to larger complexes, the number of units in a condo project now affects your financing more than it used to.
A lender quoted by the Colorado Sun in March 2025, more than a year before this change, summed up how lenders see it: "We might only be lending to one condo unit, but we're lending on the stability of the entire HOA community." Since August, that applies to almost every conventional condo loan in a larger building.
What the lender is actually grading
The HOA or its management company usually supplies the information on Fannie Mae Form 1076, a questionnaire about the building. You don't fill it out. These are the items most likely to sink a deal:
- Owners behind on dues. The form asks how many owners are 60 or more days late on assessments. Fannie Mae's guidance sets the limit at 15% of units, and it counts late regular dues separately from late special assessments.
- Lawsuits. The form asks whether the HOA is involved in any active or pending litigation.
- Repairs and deferred maintenance. An addendum asks about inspections, structural or safety problems, planned repairs and how they will be paid for.
- Reserves. The addendum asks whether the HOA has a reserve study, how much is in reserves, and about any special assessments or loans the HOA has taken out. If the lender relies on a reserve study, the HOA budget has to fund the study's highest recommended amount. The "baseline" funding method, which lets the reserve balance fall close to zero, no longer qualifies.
- Insurance. The form collects insurance details, including flood coverage. The building's master insurance policy also has to meet the agencies' master property insurance requirements, which both agencies updated in the same March 2026 announcements.
Missing answers count too. If the HOA's responses don't give the lender enough to decide, the lender has to collect other documents. If the lender still can't reach a decision, the building isn't eligible for a Fannie Mae loan. In July 2026, an industry estimate reported by National Mortgage Professional put the cost of Full Review paperwork at $100 to $1,000 per condo project.
The building's file is already in your contract
Colorado buyers aren't entitled to an HOA's records before signing a contract. The Colorado Division of Real Estate points buyers to Section 7 of the contract instead. Under the state's standard residential contract, required for use since January 1, 2026, the seller has to deliver the association documents, at the seller's expense, by the Association Documents Deadline.
Section 7.3 lists those documents, and they cover most of what the lender will check.
| What the lender checks | Where you can see it first under §7.3 |
|---|---|
| Reserve funding level | Current operating budget, most recent annual financial statements with reserve amounts |
| Whether the budget meets the reserve study | The reserve study, if one exists |
| Special assessments | List of regular and special assessments by unit type |
| Insurance coverage | List of HOA policies with limits, deductibles and expiration dates |
| Repairs and disputes | Board and annual meeting minutes, plus notices of construction defect claims from the past six months |
| Financial review | Results of the most recent audit or financial review |
One item the lender cares about isn't on that list. The contract doesn't require the HOA to report how many owners are behind on dues, so that number arrives with the lender's questionnaire. Some of the other answers can hide in board minutes, and in the Colorado Sun's March 2025 reporting, an Aurora and Denver agent said they can be "so buried that you don't realize it's a problem."
One gap matters here. The Colorado Division of Real Estate says Colorado law requires HOAs to adopt a policy on reserve studies, but it doesn't require them to actually do one. HB22-1387, a 2022 bill that would have required reserve studies, was vetoed. When a building has no reserve study, you have to work out its reserve funding from the budget itself.
Two deadlines, and the one with more room
Section 7.4 lets you terminate by the Association Documents Termination Deadline over "any unsatisfactory provision in any of the Association Documents, in Buyer's sole subjective discretion." If the documents arrive late, you get ten days after receiving them.
The loan protection in Section 5.2.2 is narrower. It lets you terminate if you aren't satisfied with whether the loan is available, based on the lender's review of your application. However, it doesn't allow termination based on loan terms, the appraised value, lender-required repairs or insurability. If the seller doesn't receive your written notice in time, your earnest money becomes nonrefundable unless another part of the contract protects it. Whether a lender turning down the building counts as a loan-availability problem is a question for your agent and, if needed, a real estate attorney. Section 7.4 has no such question, because it lets you end the contract over anything in the documents that doesn't satisfy you.
In practice, that means doing three things before your documents deadline passes:
- Ask your lender which review route your building needs: Full Review, a small-building waiver, or Freddie Mac's Exempt From Review. Ask how long the HOA usually takes to return the questionnaire.
- Use the §7.3 budget to divide the yearly reserve contribution by the HOA's total yearly assessment income. Then compare that figure with the reserve study's highest recommended amount, if the building has a study.
- Read the insurance list for deductibles. Read recent minutes for planned repairs, special assessments under discussion and pending lawsuits.
The January 4 line
There's a second date coming. For loan applications dated on or after January 4, 2027, a building's reserve contribution must be at least 15% of its budgeted yearly assessment income, up from 10%. Fannie Mae applies the higher minimum to buildings that go through Full Review. Freddie Mac set the same date.
As a simple illustration, an HOA that collects $400,000 a year in dues needs to budget $40,000 for reserves under the current rule and $60,000 under the new one. A building budgeting $50,000 meets the rule for an application dated in December and falls short for one dated in January, even if nothing about the building has changed. Today is October 4, so that change is three months away.
The new minimum applies to a buyer's loan application date, not the date a building's budget was approved. Sellers of units in buildings that budget between 10% and 15% will see their pool of conventional-loan buyers shrink once the new year starts, unless the HOA raises its reserve contributions. Higher reserve contributions usually mean higher dues.
Where this shows up in the numbers
The sale data match a market where buyers price in the building as well as the unit. In DMAR's September 2026 report, published October 3, metro Denver condos and townhomes had 7.21 months of inventory and a $365,500 median sale price, down 6.28% from a year earlier. The overall market had 4.76 months of inventory. DMAR said the attached-home market "favors prepared buyers and sellers who price with HOA fees and insurance costs in mind."
The split is wider inside the City and County of Denver. Colorado Association of Realtors figures for August 2026 show Denver condos and townhomes with a $370,000 median, 69 days on market and 7.7 months of supply. Single-family homes had 41 days on market and 3.3 months of supply.
Buyers are reacting to the building as a whole. Christina Ray, a member of DMAR's Market Trends Committee, told the Denver Post in September that her out-of-state buyers shopping for downtown Denver condos were "evaluating the entire building, not just the unit," and gave deferred maintenance and dated common areas as much weight as the unit itself. Denverite reported in August that one Denver agent's analysis found the city's condo prices were 14.3% below their 2022 peak, with rising HOA fees keeping units out of reach and more listings expiring unsold.
Mortgage rates add to the pressure. DMAR reported that the 30-year fixed rate rose to about 7.5% by late September, and Amanda Snitker, chair of DMAR's Market Trends Committee, said rate buydowns, seller-paid concessions and adjustable-rate loans are "all on the negotiating table right now." A buyer who has already checked the building's records knows which concessions to ask for, and which buildings to skip before paying for an appraisal.
If you're looking at a Denver condo this fall, I'm glad to go through an HOA's budget, reserve study and insurance list with you before your association documents deadline, and to coordinate with your lender on the building review. Brian Harvey Winback is here when you're ready. Let's Connect.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.