Published September 25, 2026 · Chicago Condo Loans Editorial Team · How we research
Quick answer For conventional loan applications dated on or after August 3, 2026, lenders can no longer use Fannie Mae’s Limited Review to approve an established condo building. The building now needs a Full Review, which looks closely at the budget, reserves, delinquent dues, lawsuits, insurance and repairs, unless it qualifies for a waiver of project review (buildings with 10 or fewer units, with limits). Fannie Mae announced the change in Lender Letter LL-2026-03 on March 18, 2026, and says it is aligned with Freddie Mac, which retired its similar Streamlined Review.
This update is part of our guide to warrantable vs. non-warrantable condos and our complete guide to condo loans in Chicago.
What changed on August 3, 2026?
When you finance a condo with a conventional loan, the lender reviews the whole building, not just your unit. For established buildings, Fannie Mae used to give lenders three paths: a Limited Review, a Full Review, or a waiver of project review. The Limited Review checked far less than a Full Review, so many buildings with thin reserves or other issues never had those issues examined.
Lender Letter LL-2026-03 retired the Limited Review. Lenders could stop using it right away and must stop for every loan application dated on or after August 3, 2026. Buildings that used to qualify through Limited Review now go through a Full Review, or the waiver of project review when the building is small enough. The date that matters is the loan application date, not the contract or closing date.
| Detail | Before the change | Applications dated Aug. 3, 2026 or later |
|---|---|---|
| Review paths for established buildings | Limited Review, Full Review, or waiver of project review | Full Review or waiver of project review |
| What the lender examines | Limited Review skipped much of the budget and building analysis | Budget and reserves, delinquent dues, litigation, insurance, single-owner concentration, commercial space and critical repairs |
| Reserve study used instead of budgeted reserves | Allowed as a substitute when the budget fell short | Budget must include the reserve study’s highest recommended allocation; baseline funding is no longer accepted |
| Waiver of project review | Narrower eligibility | New and established buildings with 10 or fewer units; buildings of 5 to 10 units can’t be part of a master association (in effect since March 18, 2026) |
| Investor-owned units | 50% limit on investor loans in established buildings under Full Review | Limit retired (in effect since March 18, 2026) |
Which Chicago buildings feel it most?
- Established buildings with thin reserves. A Full Review checks whether the budget sets aside enough for replacement reserves. Older courtyard buildings and mid-century high-rises that have kept assessments low are the most exposed.
- Buildings with deferred repairs. Under Fannie Mae’s critical-repair rules, unfunded repairs costing more than $10,000 per unit that should be done within 12 months make a building ineligible, as do failed mandatory safety inspections.
- Buildings in litigation. Lawsuits about safety, structural soundness, habitability or functional use make a building ineligible. Minor matters generally don’t.
- Buyers with larger down payments. Limited Review was mostly used when the buyer had more equity. Those buyers now face the same building review as everyone else.
Small buildings got an easier path
The same lender letter expanded the waiver of project review to new and established buildings with 10 or fewer units, effective immediately in March. Buildings with 5 to 10 units qualify only if they aren’t part of a master association or larger development. That covers many Chicago two-flat, three-flat and six-flat conversions.
A waiver isn’t a free pass. The building can’t have an Unavailable status in Fannie Mae’s Condo Project Manager system, and it must still meet Fannie Mae’s property insurance requirements.
What should Chicago buyers do now?
- Ask your lender which review path applies before you make an offer, or as soon as you’re under contract.
- Get the condo questionnaire started early. It’s the lender’s main source for a Full Review. See our guide to the condo questionnaire and HOA review.
- Read the budget’s reserve line and ask whether the building has a current reserve study.
- Ask about repairs, special assessments and lawsuits, especially in high-rises with façade work.
- Keep your financing contingency long enough for the review to finish.
- Know your backup options. If the building fails a conventional review, an FHA-approved building or a portfolio lender may still work.
What’s next: higher reserves in January 2027
The next step in the same lender letter takes effect for Full Review applications dated on or after January 4, 2027: buildings must budget at least 15% of their annual assessment income for reserves, up from 10%. See the condo reserve requirement rises to 15% in January 2027.
Frequently asked questions
Does the August 3 change affect FHA or VA loans?
No. It applies to conventional loans sold to Fannie Mae and Freddie Mac. FHA and VA have their own condo approval rules.
My building passed a Limited Review before. Is it still warrantable?
Not automatically. A loan application dated on or after August 3, 2026 needs a Full Review, or a waiver for small buildings. A Full Review checks more, so a building that passed before can fail if it has thin reserves, unfunded critical repairs or a serious lawsuit.
Does the closing date or the application date matter?
The application date. Fannie Mae requires lenders to apply the change to all loan applications dated on or after August 3, 2026.
Sources
- Fannie Mae Lender Letter LL-2026-03: Updates to Project Standards and Property Insurance Requirements (March 18, 2026)
- Fannie Mae Selling Guide B4-2.1-03: Ineligible Projects
- Fannie Mae Selling Guide B4-2.1-02: Waiver of Project Review
Educational content only, not lending or legal advice. See our Disclaimer.