Fannie Mae & Freddie Mac's New Condo Rules: What Changed for San Diego Condo Buyers
New Fannie Mae and Freddie Mac condo project review guidelines took effect August 3. What changed, why it's less dramatic than it sounds, and what buyers should do.
If you're buying or refinancing a condo in San Diego, there's a lending change you should know about.
Fannie Mae and Freddie Mac's new condo project review guidelines took effect August 3. The headline change sounds big: the elimination of "limited" project reviews.
Here's what that means, and why it's not as dramatic as it sounds.
First: what's a condo project review?
When you finance a condo with a conventional loan, the lender doesn't just evaluate you and your unit. They also evaluate the whole condo project (the building and the HOA) to make sure it's a sound investment.
They look at things like:
- The HOA's budget and reserves
- Owner-occupancy vs. investor ratios
- Delinquent HOA dues
- Pending litigation
- Commercial space in the building
- Whether any single entity owns too many units
If the project doesn't meet guidelines, financing gets harder, more expensive or impossible.
What was a "limited review"?
In the past, some conventional loans, typically those with larger down payments on established projects, qualified for a limited review. That was a streamlined check that skipped much of the deeper project analysis.
With the new guidelines, limited reviews are gone. Projects now get a fuller review.
Why it's not as big a shift as it sounds
In practice, most lenders were already gathering much of this information through the lender/condo questionnaire, a standard form the HOA or management company completes about the project's finances, insurance, litigation and occupancy.
So for many buyers, the day-to-day process won't feel very different. The questionnaire was already doing a lot of the work.
Where it could matter
The change may matter more if:
- The HOA is slow to return questionnaires, which can delay your closing
- The project has low reserves, litigation, high delinquencies or insurance gaps
- You were counting on a large down payment to get a streamlined review on a borderline building
What condo buyers should do
- Ask early about the project. Before you write an offer, have your lender check whether the building has any known approval issues.
- Request the HOA documents right away, including budget, reserve study, minutes and insurance.
- Build in time for the questionnaire and review in your escrow timeline.
- Have a backup financing plan, such as a portfolio or non-QM loan, if the project is borderline.
Condos still make sense in San Diego
Condos remain one of the most accessible ways into San Diego homeownership. This change doesn't make them a bad buy. It just makes doing your homework on the building more important than ever.
Buying or refinancing a condo? Talk to our team. We handle both the real estate and the lending, so we can flag building issues before they become closing problems.
Educational purposes only. The GreenHouse Group Inc. (CA DRE #01859042 | NMLS #366847). Lending guidelines are subject to change and vary by lender and loan program. This is not individualized lending advice.
