The 2026 Fannie Mae and Freddie Mac Condo Changes: What They Mean for Your Insurance Renewal

These rules govern whether buyers in your building can get a conventional mortgage. They do not change what your declaration or your state's condominium law requires you to carry. That distinction matters more than anything else in this article, and we come back to it below.

Why lender rules affect your master policy

Fannie Mae and Freddie Mac buy most conventional mortgages from lenders. They only buy loans in condo projects that meet their standards, which is what "warrantable" means. If your project falls short, buyers face larger down payments and higher rates, or can't get conventional financing at all, and that shows up in sale prices for every owner.

Lenders check the association, not just the borrower. Insurance is one of the first things they look at.

What changed on the insurance side

Roof coverage. Roofs must still be insured, but they no longer have to be insured on a replacement cost basis. Actual cash value (ACV) roof coverage is now acceptable. The rest of the building is still expected to be insured at replacement cost. This reverses a 2024 tightening that had pushed some associations into more expensive programs.

Inflation guard. The requirement for inflation guard coverage was retired.

Per-occurrence deductibles. Fannie Mae's Selling Guide keeps the maximum deductible for required perils at 5% of the master policy coverage amount, per occurrence.

Per-unit deductibles. For loan applications on or after July 1, 2026, a per-unit deductible on the master policy can't exceed $50,000 per unit. When the master policy has a per-unit deductible, the buyer must carry an HO-6 policy that covers it.

Unit owner HO-6 policies. The HO-6 deductible can be no more than the greater of 5% of the HO-6 coverage amount or $2,500.

Ongoing verification. Beginning January 1, 2027, loan servicers must verify coverage annually, including watching for reductions in coverage. A mid-term change to your program can surface on a lender's desk, not just at closing.

What changed on the project review side

• Limited Review ended. For loan applications dated on or after August 3, 2026, established projects with more than 10 units go through Full Review. Full Review looks at the budget, reserves, insurance, delinquencies, litigation, special assessments and inspection reports.
• Small projects got easier. The waiver of project review now covers projects with 10 or fewer units, up from 4.
• The 50% investor concentration cap was eliminated.
• Reserves rise to 15%. For Full Review applications dated on or after January 4, 2027, the budget must allocate at least 15% of annual assessment income to reserves. The alternative is a reserve study completed within the past 36 months, with the association funding at the highest level that study recommends. Baseline funding studies no longer qualify.

The application date controls, not the closing date. Mortgage industry groups asked regulators in mid-2026 to delay some of these dates, so confirm the current effective dates in the Fannie Mae Selling Guide before relying on them.

The part most summaries miss: lender minimums are not your legal requirement

Fannie Mae allowing ACV roof coverage does not mean your association is allowed to buy it.

Most state condominium acts based on the Uniform Condominium Act and the Uniform Common Interest Ownership Act require the association to insure common elements for their full insurable replacement cost, to the extent that coverage is reasonably available. Many declarations say the same thing or go further. If your governing documents require replacement cost on the building, switching the roof to ACV to save premium could put the board out of compliance with its own documents, even though a lender would accept it.

Before your board considers ACV roof coverage, a higher deductible or any other cost-saving change the new rules allow, check three things in order:

1. Your state's condominium or common interest community statute
2. Your declaration and bylaws, which usually have an insurance article
3. The lender standards, as a floor for marketability

When the three conflict, the stricter rule generally wins. If you're unsure, that's a question for your association's attorney.

What to check before your next renewal

Deductibles

• Confirm no per-unit deductible exceeds $50,000.
• Confirm the total deductible for any single occurrence is at or under 5% of the coverage amount, including separate wind, hail or named storm deductibles.
• If you have a per-unit deductible, tell owners in writing so they can make sure their HO-6 covers it.

Roof

• If your broker offers ACV roof coverage, ask for the premium difference in dollars. Then ask what the association would collect on a total roof loss today under each option. The gap between those numbers is what the board would need to fund from reserves or a special assessment.
• Check that option against your declaration before you decide.

Certificates and lender questionnaires

• Every sale now triggers Full Review in larger projects, so the certificate of insurance and the lender questionnaire get read closely. Make sure the certificate shows the actual limits, deductibles and named insured correctly. Make sure whoever completes lender questionnaires has the current policy, not last year's.

Budget and reserves

• Calculate your reserve allocation as a percentage of budgeted assessment income. If it's under 15% and you don't have a qualifying reserve study, your 2027 budget is the one lenders will look at.
• Line up the renewal date with your budget cycle, so the premium you approve is the premium in the budget lenders review.

Frequently asked questions

Does the new rule mean our master policy premium will go down?

Possibly, if your carrier was pricing the roof at replacement cost or charging for inflation guard. But a lower premium from ACV roof coverage comes with a tradeoff: less money from the insurer after a roof loss. Ask for both numbers before deciding.

Our building has 8 units. Do these changes affect us?

Projects with 10 or fewer units may now qualify for a waiver of project review, which simplifies financing for buyers. Your master policy still needs to meet the insurance requirements.

What if our per-unit deductible is above $50,000?

For loan applications on or after July 1, 2026, that can make units in the project ineligible for conventional financing. Talk with your broker about what it would cost to bring the deductible down, and weigh that against the effect on sales.

Do these rules apply to HOAs with single-family homes?

The master policy requirements described here apply to condominium projects, including two- to four-unit and detached condos. Planned unit developments where owners insure their own homes are treated differently.

Who should we ask about our specific policy?

Your licensed insurance broker for coverage questions, your association's attorney for governing document and statutory questions, and your lender contacts for warrantability questions.

Sources

• Fannie Mae, Lender Letter LL-2026-03 announcement (March 18, 2026)
• Fannie Mae Selling Guide, B7-3-03, Master Property Insurance Requirements for Project Developments
• Fannie Mae, Lender Letter LL-2026-03: Updates to Project Standards and Property Insurance Requirements
• Scotsman Guide, FHFA revamps Fannie and Freddie condo insurance rules to cut costs (March 2026)
• National Mortgage Professional, January's condo reserve increase puts project budgets in focus
• Florida Realtors, Condo financing rules to change in 2026 (May 2026)
• National Association of Mortgage Brokers, letter requesting implementation delay (June 2026)
• CAI, Fannie Mae and Freddie Mac condo lending advocacy page