What's Changing With Condos, HOA Rules, and Lending in Colorado

If you own a condo in Summit County, or you're thinking about buying one, there are some meaningful changes happening with how lenders evaluate condo projects. These are not small tweaks. They affect whether a buyer can get conventional financing on a unit, and in some cases, whether a deal closes at all.

Here is what you need to know.

What "Warrantable" Means and Why It Matters

When a buyer applies for a conventional loan on a condo, lenders check whether the condo project is considered warrantable. That term refers to whether the project meets the standards set by Fannie Mae and Freddie Mac, the two entities that back most conventional mortgages in the U.S.

A warrantable condo can be financed with a standard conventional loan. A non-warrantable condo cannot. When a project loses warrantable status, it dramatically shrinks the buyer pool for every unit in the building, not just the one being sold. Buyers who can't use conventional financing often need portfolio loans, which typically come with higher interest rates and stricter terms.

Limited Review Is Gone

Until August 3, 2026, lenders had two options for reviewing a condo project: a streamlined Limited Review, or a more thorough Full Review. Buyers who put down 10% or more on a primary residence could often close using the Limited Review path, which did not require a deep look at the HOA's finances.

That changed on August 3, 2026.

Fannie Mae eliminated Limited Review for established condo projects with more than 10 units. Every loan application on those projects now requires a Full Review, regardless of how much the buyer puts down.

What Full Review Actually Looks At

A Full Review is a comprehensive evaluation of the entire condo association's financial health. The lender examines the HOA budget, reserve fund levels, delinquency rates among owners, the master insurance policy, any pending litigation, and any pending or active special assessments.

This matters because a problem with the HOA can affect a buyer's ability to get a loan even if the buyer is financially strong. The association's situation is evaluated separately from the buyer's.

The Reserve Fund Rule Is Changing

Fannie Mae currently requires HOAs to allocate a minimum of 10% of their annual operating budget to reserves. That number is going up.

Starting January 4, 2027, that minimum reserve allocation increases to 15%. If an HOA's budget falls short of that threshold, the condo project could lose warrantable status.

There is a specific exception to note. If the HOA has a reserve study completed within the last three years by an independent qualified professional, the lender can use that study to evaluate reserve adequacy. But the budget must fund the highest reserve allocation recommended in that study, not the minimum. This means a recent, complete reserve study matters more now than it ever has.

Special Assessments and What Lenders Look At

Special assessments are also under the microscope in a Full Review. A special assessment exists when the HOA needs funding beyond what the regular monthly dues cover, typically for repairs or capital projects the reserves cannot fully absorb.

A pending or active special assessment does not automatically kill a deal, but it adds scrutiny. If the assessment is tied to critical deferred maintenance or structural repairs, lenders may deem the project ineligible for conventional financing until the issue is resolved.

One thing to understand: a special assessment cannot substitute for the reserve fund requirement. The HOA must still meet the budget reserve threshold on its own.

What Buyers Should Ask Before Making an Offer

Before writing an offer on a condo in Summit County, ask for the following documents as early as possible in your search:

The HOA budget, specifically the percentage allocated to reserves. The most recent reserve study, and when it was completed. Any pending or active special assessments and what they cover. A disclosure of any current HOA litigation.

Getting this information before you are under contract gives you and your lender time to evaluate the project before you have spent money on inspections and appraisals.

What Condo Owners Should Know

If you own a condo and are thinking about selling, the financial health of your HOA directly affects your buyer pool. If your HOA is underfunded, has deferred a reserve study, or has a pending special assessment tied to unresolved repairs, buyers using conventional financing may run into problems.

This is not always in the individual owner's control, but it is worth knowing about before you list. Understanding your HOA's standing ahead of time gives you the ability to set realistic expectations and price accordingly.

Work With a Lender Who Knows Mountain Condos

Condo financing in Summit County has its own nuances. Altitude, investor concentration, rental use, and HOA structures in mountain communities can all factor into warrantability. Working with a lender who understands the local landscape makes a real difference.

Rob Kingsbury at Vectra Bank has extensive experience with condo financing in Colorado mountain markets. If you have questions about whether a specific project will pencil out before you make an offer, he is a strong first call.

You can reach Rob directly at vectrabank.com.

Have questions about a specific condo you are considering in Summit County? Reach out directly and I am happy to walk through what the HOA documents look like and what to watch for.

---

Frequently Asked Questions

What does it mean for a condo to be non-warrantable?
A non-warrantable condo does not meet Fannie Mae or Freddie Mac guidelines. Buyers cannot use a conventional mortgage to purchase a non-warrantable unit and typically need a portfolio loan, which often comes with a higher interest rate and different qualification requirements.

What is the Fannie Mae reserve requirement for condo HOAs?
As of now, Fannie Mae requires HOAs to allocate at least 10% of their annual operating budget to reserves. Starting January 4, 2027, that minimum increases to 15%. HOAs with a current reserve study must fund reserves at the highest level the study recommends.

What happened to Limited Review for condo loans?
Fannie Mae eliminated Limited Review for established condo projects with more than 10 units, effective August 3, 2026. All loans on those projects now require a Full Review, regardless of the buyer's down payment.

What does a Full Review look at?
A Full Review requires the lender to evaluate the HOA's budget, reserve fund levels, delinquency rates, master insurance coverage, any litigation, and any pending special assessments. The buyer's financial profile and the condo project's financial health are both assessed.

Can a special assessment prevent a condo sale?
It depends. A pending special assessment for critical or deferred structural repairs can make a project ineligible for conventional financing. A routine assessment for a minor improvement is less likely to create an issue. Your lender will review the nature and scope of any assessment during the Full Review process.

Do these rules apply to all condos in Colorado?
They apply to any condo financed through a conventional loan backed by Fannie Mae or Freddie Mac, which is the majority of condo purchases. FHA and VA loans have their own separate approval requirements. Cash purchases are not subject to these guidelines, though the underlying HOA issues still affect resale value.