New Condo Lending Rules Could Stall Your Boston Home Sale

New condo lending rules can affect a Boston condo sale even in a two- or three-unit building. Fannie Mae retired its Limited Review in 2026 and caps the per-unit deductible on an association's master insurance policy at $50,000, so sellers should check the master policy and gather association documents before they list.

Will New Condo Lending Rules Affect Your Boston Home Sale?

They can. In 2026 Fannie Mae retired the streamlined "Limited Review" of condo projects that many buyers relied on, and its Selling Guide now caps the per-unit deductible on an association's master insurance policy at $50,000. If you own a condo in Jamaica Plain, Roslindale, Hyde Park, Dorchester, or Roxbury, these rules can reach you even if your building has only two or three units. The project review may be waived for a small association, but the insurance requirements still apply.

Many condos in Jamaica Plain and Roslindale aren't in big buildings with a management company. They're two-family and three-family homes that were converted into condos years ago, a triple-decker split into three units and self-managed by the owners. That's normal for this market. It's also the kind of association that can be caught off guard by lender requirements nobody on the board has read.

Key Takeaways

Fannie Mae retired the streamlined Limited Review of condo projects in 2026, so many established projects now go through a Full Review, PERS or FHA project approval unless the review is waived.
Fannie Mae caps the per-unit deductible on a condo master policy at $50,000, and the per-occurrence deductible can't exceed 5% of the master policy's coverage amount.
The project review is waived for 2- to 4-unit condo projects, but the master insurance requirements still apply to them.
HUD's single-unit approval for FHA loans requires a project with at least five units.
A Full Review checks that no more than 15% of units are 60 or more days past due and that at least 10% of the budget goes into replacement reserves.

What changed in Fannie Mae's condo lending rules?

Two things changed: the project review and the insurance rule.

The project review. A lender selling a condo loan to Fannie Mae has to confirm the project meets Fannie Mae's standards. Limited Review let many buyers in established projects get through with minimal association documentation. Fannie Mae retired it in 2026, and the Selling Guide as updated August 5, 2026 no longer lists it. Established projects with attached units are now reviewed through a Full Review, Fannie Mae's PERS process, or FHA project approval, unless the review is waived. A Full Review looks at the association's budget and reserves, delinquencies, litigation, and insurance.

The insurance rule. Fannie Mae's master property insurance requirements now cap the per-unit deductible at $50,000, and the per-occurrence deductible can't exceed 5% of the master policy's coverage amount. Coverage must be on a replacement cost basis, although roofs don't have to be. If the master policy has a per-unit deductible, the buyer needs an HO-6 (unit owner) policy with coverage at least equal to that deductible, which adds cost the buyer may not expect. If your association's deductible is above the cap, a buyer's conventional loan can be declined over something that has nothing to do with them personally.

Are small condo buildings exempt from the new lending rules?

No. The project review can be waived, but the insurance rules still apply. Fannie Mae waives the project review for units in 2- to 4-unit condo projects, and for 5- to 10-unit projects that aren't part of a larger development or master association. Many Jamaica Plain and Roslindale conversions fall into that smaller-building lane, so the association-level review may be lighter than what a large downtown building goes through.

But the waiver isn't a free pass. Fannie Mae says the waiver keeps "some basic requirements," and its master insurance requirements state they apply to 2- to 4-unit condos as well. So a three-unit association in Hyde Park can skip the Full Review and still lose a buyer's financing because nobody checked the master policy deductible at the last renewal.

Buyers using FHA face a different small-building issue. HUD's single-unit approval, which lets FHA insure a loan in a project that isn't FHA-approved, requires a project with at least five units. In a two- or three-unit association, an FHA buyer generally needs the project itself to be FHA-approved. HUD's online condo search shows which projects are.

What does a Fannie Mae Full Review look for?

It tests the association's delinquencies, reserves, litigation, critical repairs and commercial space. For buildings that do need a Full Review, Fannie Mae's Selling Guide sets tests including:

No more than 15% of units 60 or more days past due on common charges
A budget that puts at least 10% into replacement reserves, or a reserve study supporting the reserve amount
No disqualifying pending litigation involving the association, with exceptions for minor matters
No unfunded critical repairs affecting safety, structural soundness, or habitability
No more than 35% commercial space, and limits on how many units one owner can hold (for example, 20% of units in projects with 21 or more units)

What should you check before you list or buy a Boston condo?

Check the master policy deductible and the association's finances. If you're thinking about listing a condo this year, handle this before you list, not after you're under agreement.

If you're selling:

Ask whoever handles your association's insurance (or your co-owners, if you're self-managed) what the per-unit deductible is on the master policy right now.
If it's above $50,000, get ahead of it. That might mean shopping the policy, raising it with your co-owners now, or at least knowing the number so it doesn't surprise your buyer's lender mid-transaction.
Pull together your association's budget, reserve study if one exists, delinquency figures, and confirmation of whether there's any pending litigation. A lender doing a Full Review will ask for them, and having them ready shortens your buyer's timeline. Add the 6(d) certificate, which confirms your common charges are paid, to the same package.
If your building has 10 or fewer units, don't assume that means "no requirements." It usually means a lighter review on the association side, not an exemption from the insurance rules.

None of this is complicated once you know it's coming. It's just easy to miss in a self-managed association without a property manager tracking lender guidelines.

If you're buying:

If you're shopping for a condo in JP, Roslindale, or Hyde Park, or weighing a condo against a multi-family purchase, ask about the association's insurance and reserves before you get attached to a unit. A condo that looks right on a walkthrough can still hit a financing wall if the master policy or the association's finances don't hold up. Your agent and lender should pull the condo questionnaire early, not wait for underwriting to flag it.

This is the kind of detail that decides whether a closing date holds or slips while everyone scrambles to fix paperwork. Every building is different, and the only way to know where yours stands is to pull the documents and walk through them with someone who knows what lenders look for. It's also worth weighing alongside what you'd actually net from the sale, or the net proceeds estimate, once financing, timing, and any repair work factor in.

FAQ

What is a Fannie Mae "Full Review" and why does it matter for my Boston condo sale?

A Full Review is the lender's check of a condo association's budget, reserves, delinquencies, litigation, and insurance against Fannie Mae's standards. With Limited Review retired in 2026, established projects with attached units that don't qualify for a waiver are reviewed this way (or through PERS or FHA project approval) when the buyer uses a Fannie Mae conventional loan.

Does my small 2 to 3 unit condo association in Jamaica Plain still have to worry about these rules?

Partially. Fannie Mae waives the project review for 2- to 4-unit condo projects, so the association-level review is lighter. But its master insurance requirements, including the $50,000 per-unit deductible cap and replacement cost coverage (roofs aside), apply to 2- to 4-unit condos too. For FHA buyers, HUD's single-unit approval requires at least five units, so a smaller project generally needs FHA project approval.

What is the $50,000 insurance deductible rule?

Fannie Mae's Selling Guide caps the per-unit deductible on a condo master policy at $50,000. If the master policy has a per-unit deductible, the buyer's HO-6 policy must cover at least that amount.

What happens if my Boston condo building doesn't qualify for financing?

Buyers relying on conventional financing may see their loan denied or delayed until the issue is resolved. That can mean a smaller pool of cash or non-conventional buyers, a longer time on market, or a deal that falls apart in underwriting. Resolving insurance, reserve, or documentation issues before you list helps you avoid finding this out mid-transaction.

What should I do before listing my condo in Boston in 2026?

Confirm your association's master policy deductible, gather your budget and any reserve study, check delinquencies, and check for pending litigation involving the building. Having this ready lets your buyer's lender move through underwriting instead of stalling on paperwork.

If you're weighing whether to list your condo this year, or you're not sure whether your association's insurance and reserves would hold up, Juan Murray offers private, no-pressure consultations. Schedule a conversation.

The bottom line: check your association's master policy deductible and gather its financial documents before you list, so a buyer's lender doesn't find a problem mid-transaction.

Sources

Have questions? Let's connect.

About Juan Murray

Juan Murray is a Boston broker associate with more than 30 years of experience helping buyers, sellers, and investors across Greater Boston, personally leading every transaction from the first conversation through closing.

RE/MAX Real Estate Center · (978) 581-0801

Equal Housing Opportunity. Juan Murray is licensed as a Broker in Massachusetts, regulated by the Massachusetts Board of Registration of Real Estate Brokers and Salespersons. This article is general information only and does not constitute legal, tax, or financial advice. Confirm your specific costs and obligations with your closing agent, tax advisor, or lender.