Your Condo's Financing Status Just Became Part of Its Price Tag
Most condo buyers think about two things: the unit and the monthly fee. After 16 years of closings in Beachwood, Lyndhurst, Solon, and the Chagrin Valley, I'd add a third. Can the next buyer get a normal mortgage on it? This year, that got harder.
What "non-warrantable" means
A condo is non-warrantable when it doesn't meet Fannie Mae and Freddie Mac criteria for mortgage financing, and those agencies judge the whole community, not just the buyer. If the building falls short, the big lenders won't make the loan. Buyers can still finance through smaller banks and credit unions, but expect a larger down payment, as much as 30 percent, and a higher rate.
The part that trips up deals: lenders often don't order the condo questionnaire until after the appraisal, so buyers find out days before closing.
What changed in 2026
In March, Fannie Mae and Freddie Mac issued new condo lending rules. Three matter most here.
The shortcut is gone. For applications on or after August 3, 2026, every loan in a project over 10 units goes through Full Review, meaning the lender examines the budget, reserves, insurance, delinquencies, and litigation on every sale.
Reserves go up. The minimum reserve contribution rises from 10% to 15% of annual assessment income for applications on or after January 4, 2027. Associations can skip that formula with a reserve study less than three years old, funded at its highest recommended level.
Insurance got relief. Roofs can now be covered at actual cash value, and the master policy's per-unit deductible is capped at $50,000.
What Ohio professionals are saying
Kaman & Cusimano, an Ohio community association law firm, noted Fannie Mae eased its insurance rules after learning most associations landed on the "blacklist" because they couldn't get compliant policies. Partner Scott Weiss has also been quoted in the Wall Street Journal on why dues are likely heading up.
Chris Vecchi of Eclipse Community Management, which manages associations in Columbus, Dayton, and Cincinnati, gave boards a concrete example: for a community collecting $500,000 a year, the new floor means an extra $25,000 a year into reserves. His advice is to check your reserve percentage now and plan the budget adjustment before year end.
Steven Scott of Affinity Group Mortgage in Columbus told Ohio boards not to wait until December 2026 to realize they need to raise dues.
The stakes are real. In a Community Associations Institute survey, 64% of communities already deemed ineligible said it hurt sales or values.
What I'm telling my clients
Sellers: get your association's budget and reserve study before we list. If the building is at 15% or funding at its reserve study's top recommendation, I'll market that as a selling point. If not, we price for a buyer pool that may need a portfolio lender and line one up in advance.
Buyers: have your lender order the condo questionnaire right after you're under contract, not after the appraisal.
Board members: this is your 2027 budget meeting. A modest dues increase this fall costs every owner less than a building that can't sell to a conventional buyer in March.
Questions about a specific building? Call Susan Smith - 216-548-1072, Managing Partner. Smith Garofoli Group or Nicole Garofoli - 216-570-3199, Partner, . We see these questionnaires every week and guide Sellers and Buyers through the process sucessfully.
