New Condo Mortgage Rules: What Charleston Owners & Buyers Need to Know

By Thérèse Jenkins

If you own a condo, or you're hoping to buy one on Daniel Island or anywhere around Charleston, there's a mortgage change worth knowing about. Starting August 3, 2026, Fannie Mae and Freddie Mac are getting rid of their "quick look" condo reviews. That means more lenders will need to dig deep into a building's finances before they'll approve a loan.

I don't want y'all to panic. Well-run buildings should still qualify just fine. But I do want you to understand what's coming, so you're not caught off guard — whether you're buying, selling, or just living happily in your condo right now.

What's Actually Changing

Before August 3rd, a lot of condo loans could skip the deep dive. If the building was already established and the loan met certain requirements, lenders could use a shortcut review instead of digging into every detail.

That shortcut is going away. Fannie Mae is retiring what's called its "Limited Review," and Freddie Mac is doing the same with its "Streamlined Review." Starting August 3rd, most condo loans will need what's called a Full Review — a much closer look at the building itself, not just the buyer applying for the loan.

What a Full Review Actually Looks At

A Full Review means the lender checks on the health of the whole condo association, not just your credit and income. Here's what they'll be looking at:

• The budget. Is the HOA bringing in enough money to cover its regular bills?
• Reserve funds. Has the building saved up enough for big expenses down the road, like a new roof or elevator?
• Insurance. Does the building carry enough coverage, and is the deductible reasonable?
• Special assessments. If owners got hit with a surprise bill, why — and how much is still owed?
• Repairs. Is there major structural work that's been put off?
• Lawsuits. Is the association being sued over anything?
• Delinquent dues. How many owners are behind on their payments?
• Commercial space. Is too much of the building used for retail or short-term rentals?
• Ownership concentration. Does one person or investor own a big chunk of the units?

That's a lot of paperwork, but it's not paperwork for paperwork's sake. It can catch real problems — like a building that's underinsured, or a repair that keeps gettin' kicked down the road — before you're the one stuck paying for it.

Why Are They Tightening Things Up?

Here's the thing about condos: the roof, the elevators, the parking garage — those are shared costs. No single owner can just fix 'em on their own. If the association hasn't saved up enough, a big repair can turn into a nasty surprise assessment.

Picture this: you buy a condo expecting to pay $700 a month in HOA dues. Six months later, you get hit with a $30,000 special assessment for a new roof. Even if you can afford it, that's not what you signed up for.

These new rules are meant to catch that kind of risk earlier — before you close, not after. No building has to be perfect. Dues go up, repairs get made, insurance changes. The lender just wants to see that the association is handling things responsibly.

Will This Slow Down Closings?

It can — but only if the mortgage team waits too long to start.

A Full Review means gathering documents from the HOA or property manager: things like a condo questionnaire, the current budget, insurance policies, reserve information, meeting minutes, and details on any lawsuits or assessments. Some associations turn that stuff around in a few days. Others are slower, charge a fee, or send back incomplete paperwork that raises even more questions.

The mistake is waiting until the appraisal and underwriting are basically done before ordering the condo documents. By then, the closing date's close and there's little room left to fix a problem. The smart move: start the condo review the same day you go under contract.

Does Every Condo Need the Full Review?

Nope. Some smaller or simpler projects can still get a waiver, including:

• Some 2- to 4-unit buildings
• Certain 5- to 10-unit projects (with some restrictions)
• Detached condos — a standalone home that's legally set up as a condo
• Some refinance transactions

A waiver doesn't mean zero review — basic insurance and property requirements can still apply. But it's a much lighter lift than a Full Review.

Heads Up for 2027: Reserve Requirements Are Going Up Too

Here's one more thing to keep on your radar. Starting January 4, 2027, Fannie Mae is raising the minimum amount buildings need to set aside for reserves — from 10% up to 15% of the association's yearly budget. Buildings with a solid reserve study showing they're saving enough may still be fine even below that number, but it's another reason for HOAs to get their reserve planning in order sooner rather than later.

What Could Make a Condo Hard to Finance

The reviews rarely fail over small stuff. The real red flags tend to be:

• Big unfinished repairs
• Not enough insurance coverage
• Underfunded reserves
• A lawsuit that could hurt the association financially
• An unresolved special assessment
• Too much commercial or short-term rental space
• A lot of owners behind on dues

Running into one of these doesn't automatically kill a purchase. Sometimes it just means more paperwork, or a different loan program altogether.

What You Should Ask Before You Make an Offer

Whether you're buying or you already own, it's worth asking:

• Is there a special assessment coming, or already in place?
• Are any major repairs being planned or discussed?
• Has the building had a structural inspection?
• Any pending lawsuits?
• Any recent insurance problems?
• Are dues expected to jump?
• Who manages the association, and how responsive are they?

Don't assume that just because your neighbor got a mortgage in the building last year, yours will sail through the same way. Conditions can change — a new assessment, a lawsuit, an insurance shift — and every buyer's loan program is a little different too.

The Bottom Line

This new rule deserves your attention, but not your panic. Well-managed buildings should keep qualifying just like before. The ones that'll run into trouble are usually buildings with real, unresolved problems — or buyers working with a mortgage team that starts the condo review too late.

If you've got questions about a specific building, or you just want a second opinion before you make an offer, give me a call. I'm always happy to help you think it through.

Thérèse Jenkins Thérèse Jenkins Real Estate | Charleston, SC 843-568-9748 | Therese@ThereseJenkins.com | www.ThereseJenkins.com👀