Financing Insight: What Actually Matters in Condo Financing Right Now

Financing Insight: A Lender Perspective on Today’s Condo Market

After publishing my recent article on condo financing changes, it became clear that one part of the conversation deserved a closer look, the lender perspective. There’s what we see on the surface as agents and buyers, and then there’s what’s actually happening behind the scenes during underwriting. Right now, that gap matters more than ever.

If you haven’t read the original breakdown, you can find it here.

I reached out to Michael Brennan Jr. from Sanctuary Home Mortgage with a series of direct questions around warrant-ability, insurance structure, and how these new guidelines are actually being interpreted in real time.

Here are his thoughts on these updates and how they’re playing out in real time.

1. From your perspective, what’s the most meaningful change in these new guidelines, and why does it matter for buyers right now?

The most meaningful change is the $50,000 cap on per-unit master-policy deductibles for both buyers and sellers. Before this update, projects with high deductibles were stuck either raising HOAs or assessments or risk being unwarrantable. For buyers right now, this matters because it alleviates some of the uncertainty with condos. If a condo association adopts a per-unit deductible under $50,000 and buyers carry appropriate HO-6 coverage, the project is no longer automatically viewed as a red flag under conventional guidelines. This directly helps more existing condo buildings be eligible.

2. How quickly do you expect lenders to adopt these changes, and are you already seeing deals benefit from them?

Roofs on master policies may be insured on ACV (Actual Cash Value), which is an immediate change that condos will be able to implement on their upcoming insurance renewals starting 3/16. The $50,000 cap on per-unit master-policy deductibles is for applications on or after 7/1/26, so the soonest lenders will be able to close under this change is around 7/10 for conventional loans. Waiver of Project Review Expanded is available to certain projects with up to 10 units for applications on or after 8/3/26. The reserve requirement changing from 10% to 15% for condos is enforced 1/4/27, so it gives associations another 9 months to prepare for the 5% increase.

3. Do you think this will actually bring previously non-warrantable buildings back into eligibility, or is that being overstated?

I think this will greatly increase the number of projects that will be eligible, or at the least, it gives projects that were close but not quite there a chance to fix minor insurance or regulatory items that will help.

However, it won’t rescue projects with:

• Deferred maintenance
• Weak reserves
• Litigation
• Major structural or safety concerns

4. The shift around roof coverage and ACV policies seems significant. How much of an impact do you expect this to have on insurance costs for associations?

This could have a meaningful impact, especially in high-risk markets. Allowing roofs to be insured on an Actual Cash Value (ACV) basis instead of full replacement cost can materially reduce premiums. Roof claims are one of the largest drivers of condo insurance costs, particularly in the Atlanta market. I don’t think it will cut premiums in half, but for many associations, it will be the difference between having assessments placed on owners or having enough to meet the 5% reserve increase with raising dues.

5. Do you expect this to reduce the number of deals that fall apart during underwriting, especially late in the process?

For the reasons listed in question 3, those will all still be an issue with underwriting, and it’s how quickly the lender finds out about them. However, with more projects being eligible, this should decrease condos being the problem. I would advise making sure lenders are ordering condo reviews during the due diligence period to help buyers.

6. How do you see this affecting the need for portfolio loans or non-warrantable financing options? Will more buyers now qualify for conventional loans instead?

It should reduce dependence on non-warrantable financing, particularly for mid-rise and older projects. Some buyers who previously had no choice but to use portfolio products may now qualify for conventional loans, assuming the project meets reserves and financial standards. That said, non-QM and portfolio loans will still play a role for projects with structural, legal, or governance issues.

7. There’s still a strong emphasis on reserves and financial stability. In your view, what are lenders going to be watching most closely going forward?

Lenders are increasingly focused on overall project stability, not just one single stat.

Specifically:

• Reserve contribution levels (now 15%)
• Consistency of budgeting year over year
• Special assessment history

8. What do you think buyers or agents might misunderstand about these changes?

Mainly, that every condo building is now eligible. These updates are not a blanket approval. They don’t override reserve deficiencies, litigation, or structural concerns. They simplify and modernize how insurance is evaluated in today’s market. Another misunderstanding is assuming HO-6 coverage is optional. In projects with per-unit deductibles, borrowers must carry HO-6 insurance that actually matches the deductible.

9. Are there certain markets, like Florida or coastal areas, where these changes will have a bigger impact than others?

Absolutely. Florida, coastal states, and high-insurance-cost markets will feel this the most. For part of 2023, 2024, there was only one insurance carrier insuring the coast because of hurricane damage, so this will bring some carriers back. The changes directly address the realities associations face in those regions.

10. Given these updates, what should buyers, sellers, or agents be doing differently today compared to six months ago?

They should be proactive earlier. Buyers should confirm whether HO-6 coverage will be required and at what level. Agents should ask about deductible structure, not just insurance presence. Sellers should anticipate HOA questions before listing.

11. Do you think this is a temporary adjustment to market conditions, or part of a longer-term shift in how condo financing is evaluated?

This feels like a structural shift, not a temporary fix. Fannie and Freddie clearly saw that the rules in place didn’t reflect modern insurance markets. That kind of acknowledgment usually signals a lasting change in how condo risk is evaluated. Going forward, financing decisions will rely more on risk distribution and financial resilience, and less on rigid, one-size-fits-all insurance mandates.

Final Thought

If there’s one thing that stands out from this conversation, it’s that financing is not a background detail in condo purchases, and never has been.

Some of these changes will open doors, particularly for buildings that were close to qualifying but held back by insurance structure. At the same time, the fundamentals still matter. Reserves, insurance structure, and overall project stability will continue to determine whether a deal actually makes it to the closing table.

Understanding this side of the deal is just as important as finding the property itself. In a world where guidelines often change, staying ahead of the curve and understanding how these shifts affect you as a buyer or seller is what ultimately determines whether you close with confidence.