Buying a Condo With a Mortgage May Soon Get More Complicated. Here’s Why.

Aug 3 '26

For decades, condominiums have provided an affordable path to homeownership. Whether you’re purchasing your first home, downsizing into a low-maintenance lifestyle, buying a vacation property, or looking for an investment opportunity, condos have often been an attractive alternative to single-family homes.

But a significant shift is taking place in the mortgage industry—one that every condo buyer and seller should understand.

Beginning August 3, new condominium lending policies from Fannie Mae and Freddie Mac—the government-sponsored enterprises that purchase qualifying mortgages on the secondary market—are changing how some condominium purchases are evaluated.

While lenders have long reviewed condominium associations as part of the financing process, these updated guidelines require a closer examination of an association’s financial health, reserve funding, insurance coverage, and building maintenance for many transactions.

For buyers, that means qualifying for a mortgage may soon involve more than having a strong credit score, stable income, and an adequate down payment. The financial condition of the condominium association itself may now play a larger role in whether a loan is approved and how quickly it can close.

Fortunately, before buyers begin to worry, it’s important to understand what these changes mean here in our local market. While the new lending standards are making national headlines, my experience over more than two decades selling real estate in Williamsburg suggests our area is generally in a very good position.

Buying a Condo Means Buying Into a Community

Unlike purchasing a detached home, buying a condominium means you’re purchasing much more than just the unit itself.

You’re also becoming a part owner of the common areas, roofs, parking lots, landscaping, amenities, and other shared components of the property. Every owner contributes financially through HOA dues, and the condominium association is responsible for maintaining those common elements.

That means your investment depends not only on your own financial strength but also on how well the condominium association manages its finances.

Why the Rules Are Changing

The catalyst for many of these new lending requirements was the tragic collapse of the Champlain Towers South condominium in Surfside, Florida, in 2021.

Investigators uncovered years of deferred maintenance, insufficient reserve funding, and structural concerns that ultimately contributed to one of the deadliest building failures in modern U.S. history.

Although that tragedy occurred hundreds of miles away, it prompted Fannie Mae, Freddie Mac, lenders, and insurance companies across the country to take a much closer look at the financial and physical health of condominium communities before approving mortgages.

The goal is simple: reduce the likelihood that buyers unknowingly purchase into communities facing significant financial or structural challenges.

Lenders Are Looking Beyond the Buyer

Traditionally, obtaining a mortgage focused almost entirely on the buyer.

Lenders evaluated:

Credit score
Income
Employment history
Debt-to-income ratio
Down payment

Those factors remain extremely important.

Today, however, lenders are also evaluating whether the condominium association itself meets their lending standards.

Depending on the transaction, lenders may now request:

HOA financial statements
Annual budgets
Reserve studies
Insurance policies
Board meeting minutes
Information regarding deferred maintenance
Pending litigation
Special assessments
Engineering or structural reports when applicable

If those documents reveal financial concerns, inadequate reserves, significant deferred maintenance, or other issues, financing may become more difficult—even for highly qualified buyers.

Reserve Funds Matter More Than Ever

One of the biggest areas of focus is reserve funding.

Think of reserve funds as the condominium association’s savings account.

These funds are intended to pay for major future expenses such as:

Roof replacement
Parking lot resurfacing
Elevators
Exterior painting
Siding replacement
Plumbing infrastructure
HVAC systems
Other major common-area improvements

Communities with healthy reserves are generally in a much stronger financial position when unexpected repairs arise.

Associations that postpone saving often find themselves facing large special assessments or significant increases in monthly HOA dues.

What I’m Seeing Here in Williamsburg

While these national changes certainly deserve attention, I’d also like to offer some perspective based on what I’ve experienced locally.

I’ve been helping buyers and sellers throughout Williamsburg, James City County, York County, New Kent, Charles City, and the surrounding area for more than 20 years. During that time, I’ve represented many condominium buyers and sellers.

The encouraging news is that it’s actually quite rare for me to encounter a condominium association here with significant financial problems or dangerously underfunded reserves.

One reason is that Virginia has taken a proactive approach.

Under the Virginia Condominium Act, condominium associations are required to obtain an independent reserve study at least once every five years, with annual reviews to determine whether adjustments to reserve funding are needed. These reserve studies evaluate the expected life of major building components and help associations determine how much money should be set aside for future repairs and replacements.

That process encourages boards to plan ahead rather than simply reacting when expensive maintenance becomes necessary.

Because of these requirements, most condominium communities I encounter throughout our area are generally well managed, financially responsible, and proactive about maintaining their properties.

Are there exceptions?

Absolutely.

Occasionally I’ll encounter an older condominium community where deferred maintenance, aging infrastructure, or reserve funding deserves a closer look. Fortunately, those situations are the exception rather than the rule.

Another advantage we have locally is that Williamsburg simply doesn’t have a large inventory of aging high-rise condominium buildings like you’ll find in many larger metropolitan areas or coastal markets. Much of our condominium inventory is newer or consists of communities that have been consistently maintained over the years.

That doesn’t mean buyers should skip their due diligence.

Far from it.

One of the services I provide my buyers is reviewing condominium documents before they move forward with a purchase. I encourage every buyer to look beyond the beautiful kitchen, updated flooring, or attractive amenities and spend just as much time understanding the financial health of the condominium association.

Buying a condominium means buying into a community. Understanding how that community is managed is every bit as important as inspecting the individual unit.

Buyers Should Expect More Documentation

As lenders continue implementing these updated guidelines, buyers should expect additional paperwork and, in some cases, longer closing timelines.

Even financially healthy condominium associations may need additional time to provide the documentation lenders now require.

That doesn’t necessarily mean there’s a problem—it simply reflects a more thorough review process.

Working with an experienced lender, an organized condominium association, and a knowledgeable Realtor can help keep the transaction moving smoothly.

Questions Every Condo Buyer Should Ask

Before writing an offer, I encourage buyers to ask for and review:

The HOA’s current budget
The most recent reserve study
Financial statements
Insurance information
Recent board meeting minutes
Any pending or recent special assessments
Planned capital improvements
Pending litigation involving the association
The owner-occupancy ratio

These documents often tell you far more about your long-term investment than the finishes inside the unit.

The Bottom Line

National lending standards for condominium financing are becoming more rigorous, and that’s something every buyer should understand.

Fortunately, based on my experience, buyers in the Williamsburg area should feel encouraged rather than discouraged. Most of our condominium communities are professionally managed, financially responsible, and well maintained.

Still, every condominium association is unique.

That’s why it’s important to work with a Realtor who understands not only the local real estate market but also how condominium associations operate and what today’s lenders are looking for.

With the right guidance and a little extra due diligence, buying a condominium can still be an outstanding investment and a wonderful lifestyle choice.

About the Author

John Womeldorf is an Realtor with Liz Moore & Associates and has been helping buyers and sellers throughout Williamsburg, James City County, York County, New Kent, Charles City, and Virginia’s Peninsula for more than 20 years.

Known by many as “Mr. Williamsburg,” John combines decades of real estate experience with a background in construction and remodeling, giving his clients valuable insight into both the condition of a home and the community surrounding it. His philosophy—Every Home Has a Story—reflects his belief that buyers deserve to understand not only the property itself but also the neighborhood, market trends, and long-term value before making one of life’s biggest financial decisions.

Whether you’re buying your first home, relocating to Williamsburg, purchasing a condominium, or preparing to sell, John is committed to providing honest advice, local expertise, and exceptional service every step of the way.

If you’re considering buying or selling real estate in the Williamsburg area, I’d be honored to help.

John Womeldorf
Realtor | Liz Moore & Associates
MrWilliamsburg.com
757-254-8136
john@mrwilliamsburg.com