Does Fannie Mae require a condo association to be fully funded?
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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.
What is the current test?
The current budget test requires replacement-reserve funding of at least 10% of annual budgeted assessment income, after the permitted exclusions. LL-2026-03 raises that minimum to 15% for Full Review loan applications dated on or after January 4, 2027.
A lender may use an acceptable reserve study instead of calculating the budget percentage only when every listed condition is met. Among them, funded reserves must meet or exceed the study's recommendations, the budget must include the study's highest recommended reserve allocation, baseline funding cannot carry the substitution, and the study must meet Fannie Mae's content requirements.
“Fully funded,” “percent funded,” and “reserve allocation” are therefore not interchangeable. A public page should not turn one into a universal grade or promise a lender outcome from it.
Sources
- Fannie Mae Selling Guide B4-2.2-01, Full Review Process, version August 5, 2026 — current allocation calculation and study-substitution conditions.
- Fannie Mae Lender Letter LL-2026-03, issued March 18, 2026 — future 15% effective date.
Primary sources accessed September 11, 2026.