When it comes to buying a home, there isn’t a one size fits all approach. Some people want the space and privacy of a single family home, while others prefer something smaller with less day-to-day upkeep. That’s where condos come in.
They can be a great option if you want a simpler lifestyle, but there are a few important changes coming to condo financing that you should understand before making a move.
More Flexibility for Certain Properties (what’s getting easier)
Starting in August 2026, condo financing rules are getting a bit more flexible. One of the biggest changes applies to smaller condo projects, where if a development has 10 units or fewer, lenders may soon allow buyers to skip the full project review process.
This is when the lender reviews the entire condo community and looks at the HOA’s finances, insurance, number of investor-owned units and overall condition of the building to make sure it meets their guidelines before approving a loan.
In the past, that review could slow things down and add extra layers of scrutiny. Skipping it, however, means a faster and more straightforward path to approval, which is a big win for both buyers and sellers in smaller communities.
Keep in mind, there are also changes regarding insurance and investor percentages. Previously, if more than half of the units in a building were owned by investors, it was tough to qualify for conventional financing. However, that cap will loosen, opening the door for more buyers in buildings that may have been off limits before.
On top of that, updates to deductible guidelines and roof insurance requirements are expected to make things easier for certain condo projects, especially in places like Florida, where insurance has been one of the biggest hurdles.
That’s largely due to a mix of increased storm risk from more frequent and severe hurricanes, higher repair and rebuilding costs after major damage and stricter insurance standards.
More Scrutiny Elsewhere (what’s getting harder)
But while some things are getting easier, others are tightening up. The streamlined review option, which allowed for a quicker and less detailed approval process for certain condo projects, is being phased out. That means lenders will take a closer, more consistent look at a condo community’s finances and upkeep.
For buyers, this could translate to longer approval timelines in larger buildings where there is more to review.
Another major shift is around reserve requirements. Associations will need to set aside at least 15 percent of their annual budget for maintenance and repairs. On top of that, lenders must go with the highest suggested savings amount to make sure there’s enough money set aside for future repairs.
Although this could potentially lead to higher HOA fees, it’s meant to prevent underfunding, meaning residents are less likely to get hit with large, unexpected special assessments.
What to Watch Out for
Due to these changes, it’s important for condo buyers and current owners to do their homework. For example, make sure you review the association’s budget, reserves and overall financial health before committing.
You’ll also want to have an H06 insurance policy that provides enough coverage for what the building’s master policy doesn’t include. Those gaps can be significant and being underinsured can get expensive quickly.
Since condo approvals can take longer in larger communities (more documents to review, more financials to analyze and more factors for lenders to consider), planning ahead and staying organized can help keep things moving.
Condos Can Still Be a Solid Option
At the end of the day, condos can still be a great option. They often come with less maintenance, shared amenities and a more convenient lifestyle.
If you’re thinking about buying a condo or want to understand how these changes may affect you, connect with a FirstBank Mortgage loan expert. We’re happy to help you evaluate your options.
