Last reviewed: September 25, 2026 · Chicago Condo Loans Editorial Team · How we research
Quick answer: A condo loan in Chicago approves two things: you and the building. You qualify on credit, income, and down payment the same way you would for a house. The lender also reviews the condominium association: its budget and reserves, insurance, unpaid dues, lawsuits, needed repairs, and how the building is owned and used. If the building doesn’t meet the loan program’s rules, your options narrow, even when your own finances are strong. In 2026 that building review got stricter: for conventional loans, Fannie Mae and Freddie Mac ended their “limited” and “streamlined” reviews on August 3, 2026, so most established buildings now need a full review.
Key takeaways
- The building matters as much as the buyer. Lenders review the condo association before they approve a condo loan.
- Big 2026 change: for conventional loans with applications dated on or after August 3, 2026, established condo buildings generally need a full project review. The lighter limited or streamlined review is gone, except that buildings with 10 or fewer units may qualify for a waiver.
- Reserve rules are rising. Fannie Mae requires at least 10% of the budget to go to reserves today, rising to 15% for full reviews starting January 4, 2027.
- 2026 loan limits for Cook County: $832,750 for a conventional conforming loan and $541,287 for an FHA loan on a one-unit property.
- FHA and VA loans require the building (or, for FHA, sometimes the individual unit) to be approved for that program.
- In Illinois, the association must give buyers key documents under Section 22.1 of the Condominium Property Act within 10 business days of a written request. Read them before you commit.
How is a condo loan different from a house loan?
With a single-family house, the lender mainly evaluates you and the property’s appraised value. With a condo, you are buying a unit plus a shared interest in a building run by an association. The association’s finances directly affect the value and safety of the lender’s collateral, so lenders look at the whole building.
That creates three practical differences for Chicago buyers:
- An extra approval step. The lender reviews the project (the building and association), usually using a condo questionnaire the association or its management company fills out.
- More paperwork and time. The questionnaire, budget, reserve information, and insurance certificates all have to be gathered, often with fees charged by the management company.
- Pricing differences. Conventional condo loans can carry an extra pricing adjustment. Fannie Mae’s current pricing matrix includes a condo-specific adjustment that increases at higher loan-to-value ratios. You usually see it as a slightly higher rate or cost, not a separate line item.
What lenders check about a condo building
Each loan program has its own rules, but lenders reviewing a Chicago condo building typically look at:
- Budget and reserves. Whether the association sets aside enough money each year for future repairs. Fannie Mae now requires the budget to use the highest reserve contribution recommended in the building’s reserve study, if it has one, and no longer accepts a “baseline” approach that lets reserves run near zero.
- Delinquent dues. The share of owners who are 60 or more days behind on assessments. For FHA, no more than 15% of units can be 60+ days delinquent.
- Litigation. Lawsuits involving the association, especially over construction defects or safety, can make a building ineligible.
- Critical repairs and safety. Unfunded structural or safety repairs can make a building ineligible for conventional financing until they are fixed.
- Insurance. The master policy, liability coverage, and fidelity coverage must meet program minimums.
- Ownership concentration. Whether one person or entity owns too many units. FHA limits a single owner to 10% of units.
- Commercial space. Buildings with a large share of retail or office space face limits. FHA generally caps commercial space at 35% of the building’s floor area.
- Hotel-like operations. Buildings run like hotels, with rental desks, short-term rental pools, or mandatory rental arrangements, are generally ineligible for conventional agency financing.
One rule was relaxed in 2026. Fannie Mae retired its 50% limit on investor-owned units in established projects, so a building with many renters is no longer disqualified for that reason alone under Fannie Mae’s rules.
Warrantable vs. non-warrantable condos
A warrantable condo is in a building that meets Fannie Mae and/or Freddie Mac project standards, so the loan can be sold to those agencies. A non-warrantable condo is in a building that doesn’t, perhaps because of litigation, low reserves, too many delinquent owners, a single investor owning too many units, too much commercial space, or needed repairs.
A non-warrantable condo can still be financed, but usually through a portfolio or non-QM loan held by the lender. Those loans often require larger down payments and carry higher rates than conventional loans, and terms vary widely by lender. Ask early whether a building is warrantable. Your lender can often tell you before you make an offer. For the full list of issues and your financing options, see warrantable vs. non-warrantable condos in Chicago.
The 2026 rule change: full review for most buildings
Fannie Mae announced the change in Lender Letter LL-2026-03, and Freddie Mac made matching changes in Bulletin 2026-C. The main points:
| Change | What it means | Effective |
|---|---|---|
| Limited Review (Fannie Mae) and Streamlined Review (Freddie Mac) retired | Established buildings generally need a full project review for conventional loans | Applications dated on or after August 3, 2026 |
| Waiver of project review expanded | Buildings with 10 or fewer units may skip project review if they aren’t part of a master association and meet basic insurance and safety conditions | Immediately (March 2026) |
| Reserve budget rules tightened | Budget must include the highest recommended reserve contribution; the “baseline” funding method is no longer allowed | August 3, 2026 |
| Minimum reserves raised | From 10% to 15% of annual budgeted assessment income (full review) | January 4, 2027 |
| Investor concentration limit removed | Fannie Mae no longer caps investor-owned units at 50% in established projects | Immediately (March 2026) |
What this means in Chicago: many Chicago buildings, especially older high-rises and mid-size vintage buildings, used to qualify for conventional loans through the lighter review. Now more of them go through a full review, which looks harder at reserves, repairs, and finances. Buildings with thin reserves may need to raise assessments or fund a reserve study to stay warrantable, particularly ahead of the 15% reserve minimum in January 2027. Small buildings of 10 or fewer units, such as many two-flat, three-flat, and six-flat conversions, can benefit from the expanded waiver.
Your loan options for a Chicago condo
| Loan type | Typical minimum down payment | Building requirement | 2026 Cook County limit (1 unit) |
|---|---|---|---|
| Conventional (Fannie Mae / Freddie Mac) | 3%–5% for a primary residence, depending on program and borrower | Warrantable building (full review, or waiver for 10 or fewer units) | $832,750 |
| FHA | 3.5% with a credit score of 580 or higher | FHA-approved project, or FHA single-unit approval | $541,287 |
| VA (eligible veterans and service members) | 0% in many cases | VA-approved condo project | No limit for borrowers with full entitlement |
| Jumbo | Often 10%–20% or more; set by each lender | Set by each lender | Above $832,750 |
| Portfolio / non-QM (non-warrantable) | Often 20%–25% or more; set by each lender | Can finance buildings agencies won’t | Set by each lender |
With a conventional loan and less than 20% down, you’ll usually pay private mortgage insurance (PMI), which can be removed later as you build equity. FHA loans carry their own mortgage insurance premiums, which work differently.
FHA condo loans in Chicago
FHA loans are popular with first-time buyers, but the condo building must be approved. There are two routes:
- FHA project approval. The whole building is on HUD’s list of approved condominiums. Approval must be renewed, roughly every three years, so a building can drop off the list if the association lets it lapse. You can search the HUD FHA-approved condominium list by name, city, or ZIP code.
- Single-unit approval. If the building isn’t approved, a lender may be able to approve just your unit. In buildings with 10 or more units, no more than 10% of the units can have FHA loans through single-unit approval; in smaller buildings, the cap is two units. The building still has to meet requirements such as at least 50% owner occupancy.
FHA and VA approvals are separate. A building on the FHA list isn’t automatically VA-approved, and the reverse is also true. For a step-by-step walkthrough, see FHA condo approval in Chicago.
Chicago and Illinois rules every condo buyer should know
Section 22.1 disclosures
Under Section 22.1 of the Illinois Condominium Property Act, when a unit owner sells, the association must provide key information within 10 business days of a written request. That includes the declaration, bylaws, and rules; any unpaid assessments on the unit; expected capital expenditures for the current and next two fiscal years; the reserve fund’s status; the most recent year’s financial statement; pending lawsuits; and insurance coverage. The fee is capped at $375, adjusted yearly for inflation, with up to $100 more for delivery within 72 hours.
These documents overlap heavily with what your lender needs. Read them closely for low reserves, planned special assessments, and lawsuits. Those are the same red flags that can make a building hard to finance. Our guide to the condo questionnaire and HOA review shows how to read them like a lender.
Special assessments
A special assessment is a one-time or temporary charge on owners to pay for a large project, such as a roof, masonry repairs, or elevator modernization. Unpaid or upcoming assessments can affect your budget, and large unfunded projects can affect the building’s eligibility for financing. Ask the seller and association whether any assessments are approved or under discussion, and settle in your contract who pays them.
Chicago’s façade ordinance
Chicago requires buildings 80 feet or taller to have their exterior walls inspected on a regular cycle by an Illinois-licensed architect or structural engineer, with reports filed with the city. Inspections can turn up masonry or façade repairs that become large expenses or special assessments. If you’re buying in a high-rise, ask the association for its most recent façade inspection report and any repair plan.
Deconversion
Illinois law lets condo owners sell the entire building, called a deconversion, with a supermajority vote: 75% of ownership interest for buildings of four or more units under state law. In Chicago, a city ordinance raises the threshold to 85%. Owners who object in writing within 20 days of the vote have added protections on price and relocation costs. A pending deconversion offer or vote is a major issue to raise with your attorney before buying.
Step-by-step: financing a condo in Chicago
- Get pre-approved, and tell your lender you’re shopping for a condo, since some loan types and pricing differ.
- Check the building early. Ask your agent and lender whether the building is warrantable, FHA-approved, or VA-approved before you make an offer.
- Build a financing contingency into your offer with enough time for the condo review, which takes longer than for a house.
- Request the 22.1 disclosures and have them reviewed, ideally by an Illinois real estate attorney, which is standard practice in Chicago transactions.
- Your lender orders the condo questionnaire and budget from the association or management company. Fees are common.
- Appraisal and underwriting review both you and the project.
- Confirm insurance. You’ll usually need your own HO-6 (walls-in) policy on top of the building’s master policy.
- Close.
Guides in this series
- Warrantable vs. non-warrantable condos in Chicago
- FHA condo approval in Chicago: how to check a building and qualify
- The condo questionnaire and HOA review: what Chicago buyers should check
Frequently asked questions
Can I get a conventional loan on a condo with only 3% down?
Often, yes, for a primary residence in a warrantable building if you qualify for a 3% down program. Expect to pay private mortgage insurance, and note that condo pricing adjustments may affect your rate at higher loan-to-value ratios.
What happens if my building fails the condo review?
You may need a different loan type, such as FHA single-unit approval (if the building meets FHA’s rules), or a portfolio or non-QM loan for non-warrantable condos, which usually needs a bigger down payment. That’s why a financing contingency and early building checks matter.
Does the August 2026 change affect FHA or VA loans?
No. The end of limited and streamlined review applies to conventional loans sold to Fannie Mae and Freddie Mac. FHA and VA have their own condo approval systems.
How do I find out if a Chicago condo is FHA-approved?
Search HUD’s FHA-approved condominium list by building name, city, or ZIP code, and confirm the approval hasn’t expired. If it isn’t listed, ask a lender whether FHA single-unit approval is possible.
Do small Chicago condo buildings have an advantage?
For conventional loans, often yes. Fannie Mae now lets lenders waive project review for buildings with 10 or fewer units that aren’t part of a master association, as long as basic insurance and safety conditions are met.
What is the conforming loan limit for Chicago in 2026?
$832,750 for a one-unit property in Cook County. Loans above that amount are jumbo loans.
Sources
- Fannie Mae Lender Letter LL-2026-03: condo and co-op project eligibility updates
- Freddie Mac Bulletin 2026-C
- Fannie Mae Loan-Level Price Adjustment Matrix
- HUD FHA-approved condominium search
- Illinois Condominium Property Act, 765 ILCS 605/22.1
- 2026 Cook County loan limits (FHFA and HUD data)
- Overview of the Chicago façade ordinance
This guide is educational and is not lending, legal, or financial advice. Rules change and every building and borrower is different. Confirm details with a licensed mortgage professional and an Illinois attorney. See our Disclaimer.