If you're thinking about buying a condo, whether for yourself, a family member or as an investment, this one's for you.
This year I toured and read the association packets for a couple dozen condos. Below are some of the important things to look out for.
First, the first two documents (of many) I usually open and advise my clients to open are the Resale Certificate and the Reserve Study. The resale cert (as we endearingly call it), gives you a glimpse into the unit itself and a peek at the HOA in general (dues, number of units, how many rentals, delinquencies, etc.). The reserve study is a much more detailed document that tells you what the HOA community's repair bill looks like in the near, medium and long terms. These repair bills will tell you by approximately how much your HOA dues will rise.
Now to the numbers to look out for:
1) Percent funded. It's the reserve study's own score: how much of the money it says should be saved actually is. 100% is the best number. But I have yet to see an HOA that even breaks the 50% mark. There's usually a special assessment coming, especially since many communities are old and require lots of repairs.
2) The recommended assessment. The reserve study often has one. Two packets this year carried recommendations of $2,000,000 and $1,575,000 that the boards hadn't levied yet.
That bill will be your (and your neighbors') responsibility, since it happens after closing. So make sure you're good with the monthly dues, now and in the future.
3) Reserve share of dues. The repair bills are divided by total units in the condo. That's the share of each month's dues that goes to reserves. Lenders require 10% today, and 15% for loan applications from January 4, 2027.
Below that line, a lender can refuse an ordinary mortgage on any unit in the building. Unfortunately, I've seen cases where lenders approved the loan to a buyer but because the HOA is so badly managed, they forced the termination of the purchase and sale agreement. Devastating to sellers and buyers alike.
4) The master policy deductible. That's the building's insurance deductible per unit. Since July 1, 2026, the cap for an ordinary mortgage is $50,000, and one packet this year carried $75,000.
In a building with a $50,000 deductible, every financed buyer now has to carry $50,000 of coverage on their own policy. It's on the insurance certificate.
5) Three years of assessments. Not the current dues, but what the association charged on top of them over the last three years. One building charged about $1,100 a month, three years running, in three special assessments in a row.
You'll find it in the resale certificate and the minutes.
What the Lender Rules Changed in 2026
On March 18, 2026, Fannie Mae and Freddie Mac rewrote the rules that decide whether a condo building qualifies for an ordinary mortgage.
The deductible cap and the owner's-policy requirement took effect July 1. Every established building now gets a full review, and a reserve study that uses baseline funding no longer helps a building pass.
The 15% reserve share arrives January 4, 2027. The date that counts is when you apply for the loan, not when you close.
Their reason, in their own words: underfunded reserves correlate with buildings in need of critical repairs, and owners in those buildings "can experience substantial financial hardship from unexpected special assessments."
What to Do With the Five
As a buyer, before you write an offer, ask for the resale certificate, the reserve study, the budget, financial statements, the insurance certificate and two years of minutes. You have time to review all of those documents and can terminate the agreement if you don't like anything in those docs.
Then do one piece of math. Divide the recommended assessment by the number of units, and do the same with the reserve shortfall.
That per-unit number is money the price should already reflect, or money you're agreeing to pay later.
As a seller, make sure that you get those docs ready. Because if the buyer doesn't receive them, they can just walk away (or not even submit an offer in the first place). Also, I highly recommend that you set aside some cash to pay off whatever is remaining from a prior assessment, and perhaps even cover a future one.
If you've done your own analysis on condos, I'd love to learn from you how you did it.
Best regards,
Rami
Sources: Fannie Mae Lender Letter LL-2026-03; Freddie Mac Guide Bulletin 2026-C; Fannie Mae Selling Guide B4-2; client files, anonymized. Not legal advice.
Rami Al-Kabra
REALTOR®, eXp Realty
(206) 701-9272
[email protected]