Limited Review Is Gone. Here's What Your Condo Deals Look Like Now.

You've got a condo under contract in an established project. Twenty-eight units, been there since the nineties, borrower's strong, 85% LTV. A year ago that file was a Limited Review and you never thought about the HOA's books.

Run that same deal today and somebody is pulling the budget, the reserve study, the delinquency rate, the insurance certificates, and the litigation disclosure. Every one of them can kill it.

If you haven't hit this yet, you will on your next condo. Here's what changed and what it means for how early you have to ask questions.

What a Condo Limited Review used to be

Limited Review was the streamlined lane for established projects. You evaluated the borrower and the unit, and you largely skipped the association's financial condition. The budget, the reserve funding percentage, the delinquency rate, insurance adequacy, pending litigation, none of it was part of the review.

That's the whole reason it existed. It was fast because it didn't look.

Fannie retired it in Lender Letter LL-2026-03, issued March 18, 2026, coordinated with Freddie Mac and FHFA. The retirement applies to all loan applications dated on or after August 3, 2026. Freddie retired its parallel Streamlined Review on the same timeline.

If you go looking for the old section in the Selling Guide, it isn't there anymore. B4-2.2-01 now reads "Full Review Process," updated 08/05/2026.

What happens instead

Established projects that used to qualify for Limited Review now get a full project review, or they fall into a waiver lane where no project review is required at all.

Full review means somebody is certifying the project in Fannie's project database and putting an unexpired certification in the file. In the broker channel that's your lender's side of the desk, but the project documents still have to come from somewhere, and the decision is only as good as what got entered. If the budget or the reserve study is wrong or missing, that's your closing date, not theirs.

Here's the bar on the things that actually fail deals:

• Delinquencies. No more than 15% of total units can be 60 or more days past due on common expense assessments. The same 15% cap applies to each special assessment.

• Reserves. The budget has to fund replacement reserves at at least 10% of budgeted assessment income. That moves to 15% for applications dated on or after January 4, 2027.

• Reserve studies. A study can be used instead of the 10% calculation, but the budget has to include the highest recommended reserve allocation in that study, the study has to be within three years, and the baseline funding method can no longer be used to get around the reserve requirement. That piece also took effect August 3, 2026.

So a building that's been budgeting to a baseline plan and calling its reserves adequate may not be warrantable anymore, and nothing about the building changed.

The three things that will actually bite you

One. Know your waiver lanes cold. Project review is waived for detached condo units, two-to-four unit projects, five-to-ten unit projects that are not part of a larger development or master association, PUDs, Fannie-to-Fannie limited cash-out refinances at 80% LTV or less, and high LTV refinances. The five-to-ten unit lane is new breathing room, up from four. If your deal sits in one of those lanes, none of the above applies and you should know it in the first conversation, not the third week.

Two. A waiver is not a free pass. Even with project review waived, the project still can't be flagged as unavailable in Fannie's project database, still can't be a condo hotel, houseboat, or timeshare, and still has to clear insurance and appraisal requirements. On Fannie-to-Fannie limited cash-out refis there also can't be unaddressed critical repairs or an evacuation order.

Three. Don't blow up your own approval on a resubmission. This one costs people files. When a loan gets an Approve/Eligible along with a message that the project is approved, that project status holds through the credit report expiration date. Change the project ID, the project name, the property address state or zip code, or the credit report and resubmit, and you can lose that message. Re-pull credit late on a condo file and you may be starting the project conversation over from scratch.

Worth knowing too: a project can come back approved and still carry delivery restrictions that limit occupancy types or LTV. Approved doesn't mean approved for your borrower's deal.

Insurance got harder at the same time

Separate from project review, and easy to miss because everyone's focused on Limited Review. Master policies now need coverage at 100% of estimated replacement cost value, and actual cash value or depreciating policies are no longer sufficient. Roofs are exempt from that specific requirement but still have to be insured. Inflation guard coverage was retired.

Per-occurrence, per-unit deductibles are capped at $50,000, and where one exists the borrower has to carry an individual unit owner's policy. That applied to applications dated on or after July 1, 2026.

What this means for how you work

Ask about the project on day one. Not at submission. Whether a full project review has been done recently, where reserve funding actually sits as a percentage of assessment income, what the 60-day delinquency rate is, whether there's litigation or a special assessment pending, and what the master policy looks like.

Because the borrower isn't the risk on these files anymore. The building is. You can have a perfectly qualified buyer, a signed contract, and an appraisal you already paid for, and still lose the deal to a budget line item nobody looked at in week one.

Find that out in week one and you have options. Find it out at underwriting and you're making a phone call nobody wants to make.

Guideline references here reflect our understanding at publication. Confirm against Lender Letter LL-2026-03, the current Selling Guide project standards sections, your lender's overlays, and Freddie's parallel guidance before you rely on any of it.

Want a processor who knows the project rules before the file blows up?

Make Sense Processing is contract processing for loan officers in the broker channel. Project review scoped early, conditions found on day two instead of day twelve, notes you can actually read, and status you never have to chase.

partnership@makesenseprocessing.com — makesenseprocessing.com

For mortgage professionals only. This is a business to business communication for loan originators and brokers. It is not intended for consumers and is not an offer of credit. Make Sense Processing provides contract processing to licensed originators. We do not originate loans, take applications, or advise on rates, terms, or qualification. Nothing here is legal or compliance advice, and guidelines vary by lender, program, and state, so verify anything you plan to rely on.