If you are buying, selling, or representing a client purchasing a condominium in Huntington Beach, Newport Beach, Costa Mesa, Fountain Valley, Irvine, or anywhere else in Orange County, recent changes to Fannie Mae and Freddie Mac condo lending guidelines can change the financing path even when the buyer looks strong on paper.
The important thing to understand is that a borrower can have excellent credit, sufficient income, a strong down payment, and still encounter a mortgage approval problem because of the condominium project itself. New condo lending requirements are placing greater scrutiny on condominium associations, including their finances, reserves, deferred maintenance, structural conditions, insurance, and other project-level risks.
I am Lisa Alley, President and CEO of Summit Home Lending. For buyers and Realtors along the OC coast, this makes it more important than ever to investigate the condominium project early in the transaction. And if a project does not qualify for conventional Fannie Mae or Freddie Mac financing, that does not necessarily mean the transaction is over. Non-QM financing may provide another option for certain non-warrantable condos.
This article is educational. It is not a commitment to lend, and it does not quote a rate, a payment, or an approval. Start at summitlr.com or call (714) 642-9258 with the address and HOA package in hand if you want the project reviewed before you write or accept an offer.
What changed with condo financing in 2026
One of the most significant changes took effect on August 3, 2026.
Historically, certain well-qualified borrowers and condo transactions could qualify for what was known as a limited condo review. That shortcut let lenders approve eligible files without the same extensive review of the condominium association required under a full project review. For many condo projects, that shortcut is no longer available.
Limited review can still apply to some very small complexes (generally under 10 units). Most Huntington Beach and Orange County buildings that buyers actually shop are larger than that, so the practical result is a full project review on the majority of conventional condo files.
A full project review means a closer examination of the HOA and the overall health of the development. Condo financing is increasingly about qualifying two things: the borrower and the condominium project. A strong borrower does not necessarily overcome a problem with the project.
A related reserve-funding change is still phasing in. Agency guidelines have been moving HOA reserve contributions from 10% of the annual budget toward 15%, with the tighter 15% standard expected to apply beginning in early January 2027. Between now and then, a project sitting at 10% is not automatically dead. Starting in January, that 50% increase in the reserve contribution test can matter on older coastal buildings whose roofs, balconies, plumbing, and common systems are expensive to replace.
What lenders are reviewing on the HOA
Depending on the loan program and condominium project, lenders may need to examine considerably more information about the homeowners association and development. That can include:
- HOA budgets and financial statements
- Reserve funding
- Reserve studies
- Deferred maintenance
- Structural inspections
- Critical repairs
- Special assessments
- HOA litigation
- Master insurance coverage
- Project questionnaires
- Other conditions that could affect the safety or financial stability of the development
The purpose of these reviews is not simply to make condo loans more difficult. They are designed in part to identify financial and structural problems before a buyer becomes an owner. In Orange County, that often shows up on 1970s-1990s buildings near the water, where deferred balcony, roof, and plumbing work can sit in the minutes for years before it becomes a special assessment.
Why condo reserves matter
One of the most important areas lenders evaluate is the financial condition of the homeowners association.
Condo associations collect HOA dues to pay current expenses, but they also need money available for future repairs and replacement of major components. Those expenses can include roofs, balconies, elevators, plumbing systems, exterior structures, common areas, and other major components of the development.
When an association does not adequately prepare for these expenses, owners can eventually face a special assessment. Special assessments can be substantial. A condo that appears affordable based on its purchase price and monthly HOA dues could become much more expensive if the association later needs owners to contribute thousands – or potentially tens of thousands – of dollars toward major repairs.
That is why buyers should pay attention not only to the monthly HOA dues, but also to the financial health of the association. A Huntington Beach or Newport Beach unit with a modest monthly assessment and a thin reserve study is not automatically a bargain.
Structural problems can affect condo financing
Structural safety has also become an increasingly important part of condominium lending.
If inspections reveal significant deferred maintenance or critical repairs that have not been completed, conventional financing may become difficult or unavailable until the problems are adequately addressed. This is important even when the problem does not directly affect the unit being purchased.
For example, a buyer purchasing a ground-floor condo in Costa Mesa or Fountain Valley may wonder why repairs involving balconies elsewhere in the development should affect their mortgage. The reason is that condo owners share an interest in the overall project. A major structural problem, lawsuit, repair expense, or special assessment involving the development can ultimately affect every owner – not simply the unit where the problem occurred.
What is a non-warrantable condo?
A non-warrantable condo is generally a condominium that does not satisfy certain eligibility requirements necessary for standard agency financing. There are numerous reasons a condo project could become non-warrantable, depending on the applicable loan guidelines. Problems involving significant deferred maintenance, critical repairs, financial condition, insurance, litigation, or other project characteristics can affect eligibility.
This distinction matters because many traditional mortgage lenders rely heavily on loans eligible for Fannie Mae or Freddie Mac. When the project does not qualify, the lender may tell the borrower that the condo cannot be financed through its conventional loan program. That is not necessarily the end of the transaction.
Can you finance a non-warrantable condo?
Potentially, yes. There are Non-QM lenders and specialty mortgage programs designed to consider certain non-warrantable condominium projects that do not qualify for traditional Fannie Mae or Freddie Mac financing.
At Summit Home Lending, we have access to Non-QM lending options in addition to traditional mortgage programs. That can be particularly valuable when another lender discovers a condo project does not meet conventional agency requirements.
Non-warrantable condo financing does not promise an approval. The condominium project and borrower still need to meet the requirements of the applicable lender and loan program. Pricing, down-payment requirements, underwriting standards, and other terms may also differ from conventional financing.
Being told that a condo is “non-warrantable” does not automatically mean the transaction has to be canceled. There may be another financing option worth exploring.
What Realtors should do before accepting or writing a condo offer
These changes make early preparation especially important for Orange County Realtors.
If you are representing the seller
Whenever possible, obtain information about the HOA before the property is deep into escrow. Potential issues to investigate include:
- Current or upcoming special assessments
- Major planned repairs
- Structural inspections
- Deferred maintenance
- HOA litigation
- Reserve funding
- Master insurance concerns
- Recent HOA meeting minutes
Finding a problem early gives the seller and Realtor time to understand how it may affect financing. Discovering the same problem late in escrow can delay or jeopardize a transaction, especially in coastal HOAs where insurance and balcony work already sit on every buyer’s checklist.
If you are representing the buyer
Talk with the buyer’s lender early and make sure the lender knows the property is a condo. Ask questions about the development before writing the offer whenever possible, particularly if there are indications of major repairs, assessments, litigation, or financial problems. If something raises a red flag, getting the lender involved early is extremely valuable.
Buyers: do not ignore the HOA documents
Condo buyers typically receive a substantial package of HOA documents. It is tempting to skim them or ignore them altogether. Don’t.
Some of the most important documents to review include the:
- HOA budget
- Reserve study
- Balance sheet and financial statements
- Recent meeting minutes
- Special assessment information
- Structural inspection reports, when applicable
- Insurance information
The meeting minutes can be particularly useful because they may reveal issues the board is currently discussing – including repairs or expenses that have not yet resulted in a special assessment. The goal is not necessarily to find a condominium association with absolutely no problems. It is to understand what you are buying into before you become an owner.
Could these changes affect condo sellers?
Potentially. If a condominium project does not qualify for conventional financing, the number of buyers able to finance units in that development could become smaller. Some buyers may not have the down payment or qualifications required for alternative financing. Others may simply decide to purchase a different property.
That means condo project eligibility is not only a concern when purchasing. It is something owners in Huntington Beach, Newport Beach, and the rest of Orange County should consider when thinking about future resale as well.
A condo financing problem does not always mean the deal is dead
This may be the most important takeaway for Realtors. If another lender tells you “we can’t finance this condo,” do not automatically assume the transaction has to be canceled.
The problem may simply be that the condominium does not qualify under that lender’s conventional Fannie Mae or Freddie Mac program. At Summit Home Lending, we can review the situation and determine whether another financing option – including a Non-QM non-warrantable condo loan – may be available. Not every project will qualify, but it is worth investigating before walking away from a transaction.
Frequently asked questions
Did limited condo review really end in August 2026?
For most conventional Fannie Mae and Freddie Mac condo files, the limited-review shortcut stopped being available as of August 3, 2026. Very small projects (generally under 10 units) can still use a limited path in some cases. If the Huntington Beach or Irvine building you are shopping has more units than that, plan on a full project review.
What is changing with HOA reserves in 2027?
Agency condo guidelines have been moving the expected reserve contribution from 10% of the annual budget toward 15%, with the tighter test expected to apply in early January 2027. A project at 10% today is not automatically unfinanceable. Confirm the live overlay on the file, because lender overlays can be tighter than the agencies.
If my bank says the condo is non-warrantable, is the deal over?
Not automatically. Conventional agency financing may be off the table, but some Non-QM programs will still consider certain non-warrantable projects. The building and the borrower still have to fit that investor’s box. Call Summit Home Lending at (714) 642-9258 before anyone cancels escrow.
Should a Realtor wait until escrow to pull HOA documents?
No. Get the budget, reserve study, minutes, insurance, and any inspection reports as early as the listing or showing process allows. Late surprises on litigation, assessments, or deferred maintenance are how Orange County condo deals die in week three of escrow.
Does a strong buyer overcome a weak HOA?
Usually no. Credit, income, and down payment qualify the person. The project review qualifies the building. Both have to work on a conventional file.
Buying or selling a condo? Get the financing reviewed early
Condo lending is becoming more project-focused, which makes communication between the buyer, Realtor, HOA, and lender increasingly important.
If you are considering buying a condo in Huntington Beach or Orange County, preparing to list one, or already have a transaction experiencing financing problems, getting the project reviewed as early as possible can help identify potential issues before they become last-minute surprises.
Summit Home Lending can help review your condo financing options, including conventional and Non-QM solutions for certain non-warrantable condominium projects. Contact us at summitlr.com or (714) 642-9258 to discuss the property and determine what financing options may be available.
Equal Housing Opportunity. Educational information only; not a commitment to lend. All loans subject to credit approval, program availability, lender overlays, and current Fannie Mae / Freddie Mac selling guide requirements. Guidelines change. Confirm project eligibility on the live file. Summit Home Lending NMLS #339255 | Lisa Alley NMLS #317309 | CA Department of Real Estate License #01864758. 18281 Gothard St., Ste 203, Huntington Beach, CA 92648.
