For buyers — due diligence

Buying a Downtown Condo Now That Fannie Mae and Freddie Mac Review Every Building: What Your Lender Will Check

As of October 2026, buying a downtown condo with a conventional loan sold to Fannie Mae or Freddie Mac means the lender reviews the building, not just the buyer. The agencies retired their lighter project reviews for loan applications dated on or after August 3, 2026, so an established condo building now needs a Full Review unless it has 10 or fewer units, and Fannie Mae sets specific tests that can make a building ineligible.

Your Lender Underwrites the Building, Too

A conventional condo loan looks at two things: the borrower's income, credit and assets, and the building the unit sits in. The building side asks whether the condo association is financially sound, adequately insured and free of problems that could affect the collateral.

Why that review can play out differently for an older building than a new one is covered in Why Financing an Older Downtown Condo Isn't the Same Process as Financing a New One. What changed this year is how much of the building every conventional lender now has to look at.

Every Downtown High-Rise Now Gets a Full Review

Fannie Mae and Freddie Mac retired their lighter condo project reviews, Fannie Mae's Limited Review and Freddie Mac's Streamlined Review, for loan applications dated on or after August 3, 2026. Established condo projects now require a Full Review of the building, and the only waiver is for projects of 10 or fewer units.

By that threshold, any downtown high-rise gets a Full Review when the buyer's loan is a conventional loan sold to Fannie Mae or Freddie Mac. In practice, that means the lender collects detailed information on the association's budget, reserves, insurance and any legal or physical issues before the loan can close.

What Can Make a Building Ineligible

Fannie Mae's condo project standards list conditions that make a building ineligible for a Fannie Mae loan. The ones most relevant to downtown buildings:

• Commercial space. More than 35% of the building's space is nonresidential or commercial. That test is worth checking in towers that include retail or hotel space.
• Litigation. The condo association is a party to litigation about the project's safety, structural soundness, habitability or functional use.
• Critical repairs. The project needs critical repairs, including unfunded repairs costing more than $10,000 per unit that should be done within 12 months.
• Assessment delinquencies. Under Full Review, no more than 15% of units may be 60 or more days past due on assessments.
• Ownership concentration. A single entity owns more than 20% of the units in a project of 21 or more units.

None of these is visible from a listing. A building can look well run and still have pending litigation or a concentration of late assessments that only surfaces in the lender's review. That's why the building review, not just the appraisal, can decide whether the loan closes.

Reserves and Insurance Are Getting Stricter

For condo loans reviewed under Fannie Mae or Freddie Mac Full Review, the minimum replacement reserve allocation rises from 10% to 15% of the association's annual budgeted assessment income for loan applications dated on or after January 4, 2027. Where a reserve study is used instead, the budget must fund the study's highest recommended allocation, for applications dated on or after August 3, 2026. Reading a building's reserve position is covered in more depth in How to Read a Downtown Chicago Condo Building's Reserve Balance Before You Buy.

Insurance changed too. For condo loan applications dated on or after July 1, 2026, Fannie Mae and Freddie Mac cap a building's master insurance policy deductible at $50,000 per unit. When the master policy carries a per-unit deductible, the unit owner's own policy must cover at least that deductible amount. For a buyer, that's a direct cost question: the condo insurance policy you buy has to be written to cover it.

What Your Lender Will Request From Building Management

The building review happens after you're under contract and have applied for the loan. The lender sends the building's management a condo questionnaire and a document request, management completes them, usually for a fee, and the answers decide whether the building passes the Full Review. A lender will typically ask for:

• The condo questionnaire. It covers the number of units and how many are leased, any commercial space, whether a single owner holds multiple units, assessment delinquencies, litigation, special assessments and critical repairs.
• The current budget. The lender checks the reserve allocation against the agency minimum.
• The reserve study, if the association has one.
• The master insurance declarations. These show property, liability and fidelity coverage, and the deductible, including whether it applies per unit.
• Details of any litigation the association is a party to, and of any special assessment that has been approved or is planned.
• Inspection or engineering reports and any planned critical repairs, where the questionnaire asks about them.

You don't see this exchange directly. Your lender and the building's management handle it, and the timing depends largely on how quickly management returns the questionnaire.

What You Can Do Before You Write an Offer

Before an offer, a buyer can't get the building's documents. The useful steps are about the loan and the timeline:

• Get pre-approved, tell your lender you're buying a condo, and ask what it will request from the association and how long that usually takes.
• Ask whether the lender has closed loans in the building recently.
• Set the mortgage contingency period with the questionnaire's turnaround in mind, so the building review can finish before the contingency runs out.
• Once you're under contract and the master insurance declarations arrive, get a quote for your own condo policy that covers any per-unit deductible, and build it into your monthly budget.

If a Building Doesn't Pass

If a building doesn't meet Fannie Mae's standards, a conventional loan on that unit can't be sold to Fannie Mae, and Freddie Mac applies its own project standards. For a buyer relying on that kind of financing, an ineligible building usually means finding a different loan type or reconsidering the purchase.

These rules apply to conventional loans sold to Fannie Mae or Freddie Mac. FHA, VA and portfolio loans follow their own rules, which may treat the same building differently. None of this is legal or lending advice: what your loan requires, and what options exist if a building doesn't qualify, are questions for your lender, ideally at pre-approval, before you've chosen a unit.

The rules above are stated as of October 2026. Your lender applies the requirements in effect for your application date.

Roz Dupiton is a top real estate advisor and downtown Chicago condo specialist.