As we mentioned a few months ago, Fannie Mae and Freddie Mac have issued new requirements that affect community association boards and their 2027 budgets. Notably, for loan applications dated on or after January 4, 2027, the minimum annual reserve contribution will increase from 10% to 15% of the association’s total budgeted assessment.
Associations can potentially stay below the 15% threshold if they possess a current reserve study, which must be dated within three years of the loan application.
Boards should factor this increased reserve contribution into their upcoming budget planning. Additionally, boards should consider conducting a reserve study if they do not currently have one or if their existing study is outdated. Failure to meet these new standards can result in a “non-warrantable” designation, which typically disqualifies a project from conventional financing, limits the pool of potential buyers, and negatively impacts property values.