Buying or Selling a Condo? Why New Financing Rules Could Affect Your Next Move

Have you ever had a real estate deal collapse over something you never saw coming? With condo sales, it happens more often than you’d think. Some transactions fall through because the homeowners association (HOA) can’t produce the documents a buyer needs for financing. The most frustrating part is that the sellers often have no idea anything’s wrong. They assume their HOA has it all handled, right up until the deal is on the line.

If you’re planning to buy or sell home in a condominium community in Southwest Ohio, recent financing changes are something you need to understand before you list your property or make an offer.

Why Condo Financing Is Becoming More Challenging

Fannie Mae and Freddie Mac have introduced significant changes to condominium purchase eligibility. The goal is to strengthen the long-term financial health of condo communities, but the new requirements also mean more scrutiny during the financing process.

Some of the biggest updates include:

• Elimination of the Limited Review process for many conventional condo loans
• Greater emphasis on HOA reserve studies and overall financial health
• Higher reserve funding requirements, including an increase from 10% to 15% of annual budgeted assessment income beginning in 2027 unless an acceptable reserve study supports a different funding approach.
• Updated insurance requirements
• More detailed project reviews and documentation requirements

While these changes are designed to reduce risk for lenders and buyers, they also create new challenges for condo communities that are not financially prepared.

What This Means When You Buy or Sell Home

The biggest takeaway is simple. If an HOA does not meet the new Fannie Mae or Freddie Mac project standards, buyers may have difficulty obtaining conventional financing.

That can have a ripple effect throughout the community.

Potential consequences include:

• Fewer qualified buyers
• Longer time on the market
• Delayed closings
• Contracts falling apart
• Increased pressure on resale values

Even well-maintained properties can become difficult to finance if the HOA does not meet lending requirements.

Why Many Homeowners Never See This Coming

One of the biggest surprises for sellers is that they often have no idea their HOA has an issue.

Many HOA boards are made up of dedicated volunteers who work hard for their communities. However, these evolving lending requirements are complex, and many boards simply are not aware of everything lenders now expect.

Unfortunately, these problems are often discovered only after a buyer is under contract. By then, everyone involved is racing against deadlines while trying to gather documents or resolve financial concerns that may have existed for years.

How You Can Prepare Before Listing or Buying

Whether you’re purchasing a condo or preparing to sell one, being proactive can save significant time and frustration.

Before your transaction begins, consider taking these steps:

• Review the HOA’s current budget.
• Request the most recent reserve study.
• Verify that the community’s insurance coverage meets current requirements.
• Ask your lender or Realtor to begin the condominium project review as early as possible.

Getting answers before you have a contract in hand can help avoid unexpected delays and improve the chances of a smooth closing.

Local Knowledge Matters More Than Ever

Condominium transactions have always involved additional layers of review, but today’s lending requirements make experience even more valuable.

If you’re planning to buy or sell home in Southwest Ohio, understanding how your HOA’s financial health affects financing can make the difference between a successful closing and a failed transaction.

At the Cin-Day Group, we work closely with buyers, sellers, lenders, title companies, and HOAs to identify potential issues early and help keep transactions moving forward. The earlier these conversations happen, the more options everyone has.

If you’re thinking about buying or selling a condo, let’s talk before you make your next move. We’re here to help you navigate the process with confidence and avoid surprises that could impact your sale.