Answers for the next board meeting.

Start with your Update question

• Choose Update or Full

  An Update may fit when a qualifying prior study provides a dependable baseline and changed facts can be reconciled. Missing or unreliable baseline evidence may require additional work or a Full Reserve Study.

• Gather the right records

  Keep the latest issued study, completed-work records and current reserve financial records available. The agreed scope determines which records are needed next.

• Reflect completed and partial work

  Completed work can change remaining life, future replacement scope, project timing and available reserves. Record the work actually completed, then review what still needs to be planned and funded.

• Review prior component costs

  A documented prior cost may support an Update when its component, scope and date are clear. It still needs review against current work, conditions and available evidence.

• Prepare the budget decision

  Before adopting a budget, compare the reserve study with current property and financial records: major components, condition, remaining life, costs, completed work, reserve balance, annual contribution, and the projects expected next.

• Check separate lender applicability

  For Fannie Mae Full Review, the lender may review the most current reserve study or Reserve Study Update only if it was completed within three years of the date the lender approves the project. A baseline-funded study cannot carry the reserve-study substitution for applications dated on or after August 3, 2026.

Know what changed? See the Update scope. Unsure what the study supports? Start with Study Check.

eligibility

• Can a reserve study replace Fannie Mae's reserve-allocation budget test?

  Yes, a lender may use an acceptable reserve study instead of calculating Fannie Mae's Full Review reserve-allocation percentage, but only when every substitution condition is met. Having a reserve study does not by itself waive the budget test or guarantee project eligibility.

• Does Fannie Mae require a condo association to be fully funded?

  No current Fannie Mae Full Review rule requires a condo association to be 100% funded or assigns a passing percent-funded score. The Guide tests the budget's reserve allocation or, when used, the specific conditions for a reserve-study substitution.

• Does pending litigation make our condo project ineligible?

  Not every lawsuit makes a project ineligible under Fannie Mae's current Guide. Litigation involving the HOA, or specified sponsor or developer litigation, can be ineligible, while documented minor matters may fit listed exceptions that the lender must evaluate.

• How do I calculate the 15% reserve allocation for my condo budget?

  Divide the adopted budget's annual reserve allocation by annual budgeted assessment income after four permitted exclusions. The result must be at least 10% for loan applications dated before January 4, 2027 and at least 15% for those dated on or after that day. Ballast's complimentary calculator does the arithmetic, reads both tests, and states the dollar gap and the cost per unit per month.

• How many owners can be behind on dues before it stops a loan?

  For Fannie Mae Full Review, no more than 15% of total project units may be 60 days or more past due on common expense assessments. The same 15% limit is applied separately to units 60 days or more past due on each special assessment.

• How much commercial space can a condo project have?

  Under Fannie Mae Selling Guide B4-2.1-03, commercial or mixed-use space may not exceed 35% of the condo or co-op project, or 35% of the building in which the project is located. The lender determines the applicable square footage and calculation.

• Is my condo warrantable?

  A condo project counts as warrantable when it passes ten Fannie Mae project criteria: reserve allocation, study substitution, study currency, delinquency, single-entity ownership, commercial space, critical repairs, litigation, business income, and termination or disqualifying arrangements. Ballast's complimentary Standing Check screens all ten in about three minutes.

• One owner owns several units. Does that make the project ineligible?

  Fannie Mae's current single-entity ownership rule has three distinct conditions: two units for a 5-to-10-unit project that is part of a master association, two units for an 11-to-20-unit project, and 20% for a project with 21 or more units.

• What counts as a critical repair under Fannie Mae's project rules?

  Fannie Mae defines critical repairs by their effect on safety, soundness, structural integrity, habitability, financial viability, or marketability, and lists specific conditions including certain unfunded repairs over $10,000 per unit that should be undertaken within 12 months.

• What does a Fannie Mae-ineligible project cost an individual owner?

  Fannie Mae's Guide does not state a dollar cost, sale-price discount, rate premium, or guaranteed transaction outcome for an owner in an ineligible project. It states that Fannie Mae will not purchase or securitize loans secured by units in projects with listed ineligible characteristics.

• What does non-warrantable condo mean?

  A non-warrantable condo is a unit in a project that fails Fannie Mae's or Freddie Mac's project eligibility review, so a mortgage on the unit cannot be sold to that agency. A buyer needs financing that does not depend on that sale, such as a lender that keeps the loan itself, or cash, and the board is usually the only party that can fix the project.

• What happens to a sale when a condo is non-warrantable?

  If a project has a listed ineligible characteristic, Fannie Mae says it will not purchase or securitize a mortgage loan secured by a unit in that project. The source does not prove that every lender will reject the loan or that the sale must fail.

• What is the highest recommended reserve allocation in our study?

  When a lender uses a reserve study instead of Fannie Mae's Full Review reserve-allocation calculation, the budget must include the study's highest recommended reserve allocation. This requirement applies to loan applications dated on or after August 3, 2026.

• When does the 15% condo reserve requirement start in 2027?

  Fannie Mae's Full Review minimum remains 10% for loan applications dated before January 4, 2027. For Full Review applications dated on or after January 4, 2027, Fannie Mae's lender letter of March 18, 2026 raises the minimum reserve allocation to 15% of annual budgeted assessment income.

• Which reserve funding method does Fannie Mae accept?

  Fannie Mae's current project-review sources do not publish a universal list of approved reserve-study funding methods. They expressly bar baseline funding from replacing the Full Review reserve-allocation test and require the budget to fund the study's highest recommended allocation when the substitution is used.

• Why is baseline funding no longer accepted for the reserve-study exception?

  For loan applications dated on or after August 3, 2026, Fannie Mae does not allow a baseline-funding reserve study to replace the Full Review reserve-allocation budget test. Baseline funding does not independently fail a project whose budget satisfies the applicable allocation test.

study quality

• Can we reuse old replacement costs in a Reserve Study Update?

  A documented prior cost may support an Update when its component, scope and date are clear. It still needs review against current work, conditions and available evidence.

• Can we use a Reserve Study Update instead of a new study?

  An Update may fit when a qualifying prior study provides a dependable baseline and changed facts can be reconciled. Missing or unreliable baseline evidence may require additional work or a Full Reserve Study.

• How much does a reserve study update cost?

  Ballast prices a reserve study update from a published three-tier property grid. The tier follows the property's complexity. The Update fee pays for recomputing every component at current cost using a supported prior inventory.

• How old can a reserve study be for Fannie Mae review?

  For Fannie Mae Full Review, the lender may review the most current reserve study or Reserve Study Update only if it was completed within three years of the date the lender approves the project. A baseline-funded study cannot carry the reserve-study substitution for applications dated on or after August 3, 2026.

• What changes in our reserve study after a completed project?

  Completed work can change remaining life, future replacement scope, project timing and available reserves. Record the work actually completed, then review what still needs to be planned and funded.

• What documents do we need for a Reserve Study Update?

  Keep the latest issued study, completed-work records and current reserve financial records available. The agreed scope determines which records are needed next.

• What does a reserve study cost?

  No trade association or regulator publishes a reserve study price range. Two national preparers do: one states a study costs as little as $1,000 or as much as $7,500 or more, and the other states a full study typically costs under 1% of the association's annual budget, with an update at 25% to 80% of that. Property size, building systems and the existing record drive the figure.

• What does percent funded mean, and what number is good?

  Percent funded compares reserve cash with a calculated reserve need at a point in time. It is a ratio, not a universal grade, and Fannie Mae's current Full Review rules do not publish weak, fair, strong, or passing percent-funded bands.

• What is a reserve study, and what is actually in one?

  In Fannie Mae's Full Review framework, a reserve study is an independent third-party analysis covering major common-area components, their condition and remaining useful life, repair or replacement costs, annual contributions including inflation, existing funded reserves, and a suggested funding plan.

• What makes a reserve study too old for budget planning?

  There is no universal source-backed birthday that makes every reserve study unusable for budgeting. A study needs review when material property, project, cost, reserve-balance, or funding facts no longer match current conditions; Fannie Mae's separate lender-review rule uses a three-year window.

• What reserve-study gaps can distort next-year contributions?

  Missing or stale component, condition, useful-life, cost, reserve-balance, inflation, or funding-plan information can change a reserve study's annual contribution estimate. A precise total is not reliable merely because it is precise.

• What should a board check in its reserve study before budget season?

  Before adopting a budget, compare the reserve study with current property and financial records: major components, condition, remaining life, costs, completed work, reserve balance, annual contribution, and the projects expected next.

• What should our board do after a Study Check?

  Use the findings to retain useful study content, address confirmed gaps and supply the specific information needed to resolve open questions. Confirm the smallest supported next step before agreeing to professional work. A Study Check reviews the document and information supplied; it does not issue a new reserve plan or determine lender approval.

• Why can two reserve studies of the same property disagree?

  Fannie Mae requires a reserve study to address specific subjects but does not require a standard format or prescribe every component life, cost input, or assumption. Two studies can therefore differ because their inventories, condition findings, timing, costs, balances, or funding assumptions differ.