For sellers — the process

Selling a Downtown Condo Under Fannie Mae and Freddie Mac's Tougher Building Review: Get Your Association's Paperwork Ready Before You List

As of October 2026, when a buyer uses a conventional loan sold to Fannie Mae or Freddie Mac, the lender reviews the seller's building as well as the buyer. For loan applications dated on or after August 3, 2026, any established condo project of more than 10 units gets a Full Review, which makes the association's budget, reserves, insurance and litigation history part of every downtown condo sale financed that way.

Your Buyer's Lender Will Review Your Building

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, with a waiver available only to projects of 10 or fewer units. Every downtown high-rise is above that threshold.

The review is triggered by the buyer's financing, not by anything the seller does. But its result lands on the sale: if the building doesn't pass, a buyer relying on a conventional loan sold to Fannie Mae or Freddie Mac may not be able to close on the terms in the contract.

What the Review Looks At

Fannie Mae's condo project standards make a building ineligible for a Fannie Mae loan under several conditions. The ones that matter most to a seller:

• 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.

Two more items sit alongside those tests. Under Fannie Mae or Freddie Mac Full Review, the association's budget must allocate a minimum share of annual budgeted assessment income to replacement reserves (10% now, rising to 15% for applications dated on or after January 4, 2027), or, where a reserve study is used, fund the study's highest recommended allocation. And for applications dated on or after July 1, 2026, the master insurance policy deductible is capped at $50,000 per unit, with the unit owner's own policy required to cover any per-unit deductible.

Get the Association's Information Before You List, Not After You're Under Contract

The time to learn what the review will find is before a buyer's lender finds it. A written request to the building's management, authorized by you as the owner, can ask for:

• The current budget and the most recent reserve study, if there is one.
• The master insurance declarations, including the deductible.
• Any information on litigation involving the association.
• Any special assessment that's pending, approved or under discussion.

At the same time, authorize the property manager to share association information with your listing agent as part of pre-listing preparation. Questions then get answered directly instead of passing through you, and the paperwork is in front of the person pricing and marketing the condo before the listing goes live.

If a special assessment is in the picture, When a Special Assessment Changes Your Timeline to Sell covers how it affects the sequence of a sale. For the reserve figures themselves, How to Read a Downtown Chicago Condo Building's Reserve Balance Before You Buy is written for buyers, which makes it a useful way to see the building the way a buyer will.

If Something Won't Pass

Knowing about an eligibility problem before listing changes several decisions. Pricing has to reflect that some buyers' financing may not work for the unit. Disclosure has to be handled accurately and early, with your attorney's guidance. And when offers arrive, the financing behind each one matters as much as the price, because an offer that depends on a loan the building can't support may not close.

These rules apply to conventional loans sold to Fannie Mae or Freddie Mac. FHA, VA and portfolio loans follow their own rules, so a building that doesn't meet Fannie Mae's standards narrows the financing that works rather than ruling out a sale. None of this is legal or lending advice; how a particular buyer's loan will treat the building is a question for that buyer's lender.

January 4, 2027: The Reserve Bar Moves to 15%

For loan applications dated on or after January 4, 2027, the minimum replacement reserve allocation under Fannie Mae or Freddie Mac Full Review rises from 10% to 15% of the association's annual budgeted assessment income. A seller listing around the turn of the year will have buyers whose applications fall under the new minimum.

The practical step is to ask the board or management whether the current budget already meets the 15% minimum, or whether the building relies on a reserve study instead. What the board does about it is the board's decision. For a seller, the point is to know the answer before a buyer's lender asks.

Timeline Expectations

Association paperwork often sets the pace of a downtown condo closing, as covered in What Actually Delays a Downtown Condo Closing. A Full Review adds to that paperwork, because the buyer's lender needs the building's information before it can approve the loan.

Ask management now how quickly it typically returns lender questionnaires. The answer tells you how much time to build into the contract's closing date.

The rules here are stated as of October 2026; the buyer's lender applies whatever is in effect for the buyer's application date.

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