Since August 2026, Fannie Mae no longer lets lenders use its streamlined Limited Review for condo loans. Lenders now review the condo association’s finances in full, including reserves, insurance, special assessments and owner delinquencies. For first-time buyers in Chicago, where condos are a common first home, a building with weak finances can now block a conventional loan.
Last reviewed September 28, 2026 ยท Chicago First Time Home Buyer editorial team
What changed
| Change | Effective | What it means |
|---|---|---|
| Limited Review retired (Fannie Mae Lender Letter LL-2026-03) | August 2026 | Lenders must run a Full Review of the building’s finances and condition |
| Waiver of project review expanded | With LL-2026-03 | Buildings with up to 10 units, up from 4, can skip project review if they meet certain criteria |
| Reserve requirement raised | January 2027 | Associations must budget 15% of operating costs for reserves, up from 10% |
Why it matters in Chicago
Much of Chicago’s condo supply sits in older buildings and small conversions. Buildings with thin reserves, open special assessments or pending lawsuits are more likely to fail a Full Review and be labeled non-warrantable, which usually means fewer loan options and higher costs. The expanded waiver helps small buildings of 10 units or fewer.
What to ask for before you make an offer
- The association’s current budget and how much goes to reserves.
- The most recent reserve study, if one exists.
- Any current or planned special assessments.
- Pending litigation involving the association.
- The share of owners behind on their assessments.
- Whether your lender has already reviewed or approved the building.
Common questions
What is a non-warrantable condo?
A condo in a building that does not meet Fannie Mae or Freddie Mac project standards. Buyers can still finance one, but usually through fewer lenders, with larger down payments or higher rates.
Do the new rules affect FHA condo loans?
No. LL-2026-03 covers Fannie Mae conventional loans. FHA has its own condo approval process.
For the loan amounts that apply in Cook County, see 2026 loan limits in Chicago and Cook County. If you are weighing a condo against a two-flat, see buying a Chicago two-flat with an FHA loan, and for help with the down payment, down payment assistance programs in Chicago.