Buy a condo in Greater Boston with a conventional loan and the lender underwrites the building along with you. How much of that building review happens depends first on how many units it has, and the rules for it sit in Fannie Mae’s Selling Guide.
Where project review is waived
Fannie Mae waives project review for a unit in a two- to four-unit condo project, new or established. It also waives it for a unit in a five- to ten-unit project that is not part of a larger development or master association; attached units in a five- to ten-unit project that is part of one go through the Full Review. A detached condo unit is waived at any project size, and so are some refinances of loans Fannie Mae already owns. Even when review is waived, the lender still has to confirm that the project isn’t a condo hotel, timeshare or segmented ownership arrangement, that it isn’t terminating or in insolvency proceedings, and that it isn’t marked Unavailable in Fannie Mae’s Condo Project Manager. The no-critical-repairs check under a waived review applies only to those Fannie Mae-to-Fannie Mae refinances, in projects with more than ten attached units. The sections are B4-2.1-02 for the waiver and B4-2.1-03 for the ineligible list.
The Full Review of an established building
For an established project, the Full Review in B4-2.2-01 sets two delinquency tests and a budget test. No more than 15% of the total units may be 60 days or more past due on common expense assessments, and the lender gets that ratio by dividing the units that far behind by all the units in the project. The same 15% limit applies to each special assessment. And the lender reviews the association’s projected budget to determine that it’s adequate, meaning it carries the line items pertinent to that type of project, and that it funds replacement reserves for capital expenditures and deferred maintenance at a level of at least 10% of the budget, measured as the annual reserve allocation divided by annual budgeted assessment income. The lender may instead rely on a reserve study, if it shows funded reserves equivalent to that standard and meeting the study’s own recommendations.
What makes a project ineligible outright
A few things put a project on the ineligible list no matter what the numbers say. Nonresidential or commercial space over 35% of the total. A single entity, meaning one individual, investor group, partnership, sponsor or corporation, owning more than 2 units in a project of 11 to 20 units, or more than 20% of the units in a project of 21 or more. Litigation naming the association that relates to safety, structural soundness, habitability or functional use. And critical repairs, which Fannie Mae defines to include material deficiencies that could result in or contribute to a critical element or system failure within one year, mold, water intrusion or damaging leaks, advanced physical deterioration, a failed mandatory structural inspection, or unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months.
Established or new
Under B4-2.1-01, a project is established when at least 90% of its units have been conveyed to purchasers, construction is complete including all units and common elements, no additional phasing or annexation is planned, and control of the association has been turned over to the unit owners. Anything short of that is a new project, and the Full Review adds requirements for it, with one exception: a finished, turned-over project can still count as established when the shortfall is units the developer holds back for rent, capped at a fifth of the project, with fees current and no special assessments.
What to ask for before you write an offer
The association’s current budget, the count of units past due on fees and on any special assessment, the reserve balance, and the last year of meeting minutes. In a bigger building those documents decide whether a conventional loan works on the unit at all, and it’s better to know before your deposit is on the table. Looking at a condo in a larger Boston building this fall? Send me the address and I’ll ask the management company for the package before you write an offer. Diana Kim, REALTOR®, eXp Realty.
Questions
Common questions
Does a condo in a three-decker need a Fannie Mae project review?
No. Fannie Mae waives project review for a unit in a two- to four-unit condo project, new or established. The lender still confirms that the project isn't a hotel, timeshare or segmented ownership arrangement and isn't terminating or in insolvency proceedings.
How many delinquent units can a condo building have?
Under the Full Review of an established project, no more than 15% of the total units may be 60 days or more past due on common expense assessments, and the same 15% limit applies to each special assessment.
How much does the condo association have to put in reserves?
The lender reviews the projected budget to confirm it funds replacement reserves for capital expenditures and deferred maintenance at a level of at least 10% of the budget, calculated as the annual reserve allocation divided by annual budgeted assessment income. A reserve study can be used in place of the 10% calculation if it shows the project's funded reserves are adequate.
What counts as a critical repair that makes a building ineligible?
Fannie Mae's list includes material deficiencies that could lead to a critical element or system failure within one year, mold, water intrusion or damaging leaks, advanced physical deterioration, a failed mandatory structural inspection, and unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months.
Sources
- Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects (08/05/2026), Projects in Need of Critical Repairs. The table row: 'Projects in need of critical repairs, including material deficiencies and significant deferred maintenance.' The definition includes 'material deficiencies, which, if left uncorrected, have the potential to result in or contribute to critical element or system failure within one year', 'any mold, water intrusions or potentially damaging leaks to the project's building(s)', 'advanced physical deterioration', 'any project that failed to pass state, county, or other jurisdictional mandatory inspections or certifications specific to structural safety, soundness, and habitability', and 'any unfunded repairs costing more than $10,000 per unit that should be undertaken within the next 12 months (does not include repairs made by the unit owner or repairs funded through a special assessment).'
- Fannie Mae Selling Guide B4-2.2-01, Full Review Process (08/05/2026), Full Review Eligibility Requirements: 'No more than 15% of the total units in a project are 60 days or more past due on common expense assessments (also known as HOA fees).' 'This ratio is calculated by dividing the number of units with common expense assessments that are past due by 60 or more days by the total number of units in the project.' 'No more than 15% of the total units in a project are 60 days or more past due in the payment of each special assessment.'
- Fannie Mae Selling Guide B4-2.1-01, General Information on Project Standards (08/05/2026), project types. Established condo project: 'A project for which all of the following are true: at least 90% of the total units in the project have been conveyed to unit purchasers; the project is 100% complete, including all units and common elements; the project is not subject to additional phasing or annexation; and control of the HOA has been turned over to the unit owners.' Same row: 'A project may also be treated as an established project with less than 90% of the units sold to unit purchasers, provided the deficit is the result of the developer holding back units for rent. The following requirements must be met: construction is 100% complete; the project is not subject to any additional phasing or annexation, and the HOA has been turned over to the unit owners; the developer's share of the units held back for rental is no more than 20% of the project's total units; HOA fees are paid current in developer-held units; and there are no active or pending special assessments in the project.'
- Fannie Mae Selling Guide B4-2.1-02, Waiver of Project Review (08/05/2026), Transactions Eligible for a Waiver of Project Review: 'Unit in a two- to four-unit condo project. Project review is waived for new and established condo projects.' Also in the table: 'Detached condo unit. A detached condo is defined as any condo unit that is completely detached from other condo units in the project' (waiver applies for new and established projects), 'Unit in a PUD project', 'Fannie Mae to Fannie Mae limited cash-out refinance' and high LTV refinance loans. Requirements that apply when review is waived: the project is not in Condo Project Manager with a status of Unavailable; is not a condo hotel or motel, houseboat project, or a timeshare or segmented ownership project; priority of common expense assessments; insurance requirements; 'there must be no unaddressed critical repairs or projects subject to evacuation orders (as described in B4-2.1-03, Ineligible Projects) for Fannie Mae to Fannie Mae limited cash-out refinances. This requirement applies to projects with more than ten attached units, as well as projects with five- to ten- attached units that are part of a larger development or master association'; and the project is not terminating and is not involved in insolvency proceedings.
Written by Diana Yeji Kim — REALTOR® at eXp Realty, serving Greater Boston in English, Korean, and Japanese.
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