condo-reserves

Lenders evaluate more than just your personal credit when you buy or refinance a condo. They evaluate the association too.

Fannie Mae and Freddie Mac—which back most conventional mortgages—have specific requirements for condo associations. Buildings that don't meet reserve thresholds may be classified as "limited review" or even ineligible for conventional financing. This matters because:

Fewer loan options. If your building doesn't qualify for conventional financing, buyers are limited to portfolio loans or cash purchases. That shrinks your buyer pool dramatically.
Higher rates. Non-warrantable condos (those that don't meet agency requirements) typically carry higher interest rates. Buyers pay more, which means they can afford to offer less.
Refinancing complications. If you want to refinance and your building has slipped out of compliance, you may face limited options or unfavorable terms.

The reserve requirements aren't arbitrary. Lenders know that underfunded buildings become financial problems for owners—and financial problems for owners become defaults for lenders.

Maintaining 100% funded reserves keeps your building eligible for the broadest range of financing options. That protects every owner's ability to buy, sell, or refinance on favorable terms.