New Condo Lending Rules Coming January 4, 2027: What Condo Buyers and Sellers in Conejo Valley Need to Know NOW
If you own or are considering buying a condo in Westlake Village, Thousand Oaks, Agoura Hills, Newbury Park or elsewhere in the Conejo Valley, a change coming January 4, 2027 could likely affect your financing, HOA dues and even the marketability of your property.
Beginning January 4, 2027, Freddie Mac and Fannie Mae will increase the minimum replacement-reserve allocation required for condominiums from 10% to 15% of annual budgeted assessment income for mortgage applications, thus increasing HOA financial scrutiny to every conventional condo transaction. Sellers in Conejo Valley should pull HOA documents now; buyers should have lenders review the building before writing offers or waiving contingencies.
For condo sellers, preparing HOA documentation early, and understanding your HOA’s financial health is crucial. For buyers, the HOA and condo itself, not just your credit score, will determine whether your loan is approved.
At Lydia Gable Realty Group, we help buyers and sellers throughout Westlake Village, Thousand Oaks, Agoura Hills, Oak Park, Newbury Park and the surrounding Conejo Valley navigate the unique issues that can arise with condominium transactions, including HOA documents, financing considerations and property eligibility/ warrantability.
What are the new condo lender guidelines taking effect in January 2027?
Beginning January 4, 2027, Freddie Mac and Fannie Mae will increase the minimum replacement-reserve allocation required for condominiums to 15% of annual budgeted assessment income for mortgage applications and warrantability. HOA financial scrutiny will significant rise for every conventional condo loan. Sellers in Conejo Valley should pull HOA documents now; buyers should have lenders review the building before writing offers or waiving contingencies.
What Is a “Warrantable” Condo?
You may hear lenders and real estate agents use the terms “warrantable” and “non-warrantable” condo. Generally, a warrantable condominium is one that meets the eligibility requirements of a conventional mortgage program such as Fannie Mae or Freddie Mac. A non-warrantable condo does not meet those requirements.
A project could be considered non-warrantable for a variety of reasons, including issues involving:
HOA finances or reserves
Insurance
Significant deferred maintenance
Litigation
Commercial space
Ownership or occupancy characteristics
Hotel or condotel characteristics
The structure or organization of the project
Fannie Mae specifically identifies insufficient master property insurance and critical repair issues among the leading reasons condominium projects may have an ineligible status.
This is why “Can I afford the condo?” isn't the only financing question a buyer should ask.
The better question is: “Can this particular condominium project be financed with the type of loan I intend to use?”
Why are reserves so important?
A condominium association's reserves are essentially its savings account for major future expenses. Depending on the HOA community, those expenses can include:
Roof replacement
Exterior painting
Structural repairs
Paving and concrete
Plumbing systems
Electrical systems
Elevators
Pool and spa improvements
Common-area renovations
Other major capital expenditures
A financially healthy HOA should be planning for these expenses rather than relying entirely on special assessments when a major repair becomes necessary. The new lending standard is intended to encourage stronger reserve funding and reduce the risk that condominium projects become financially or physically distressed.
What condo sellers need to know if you’re thinking about selling in Conejo Valley or Ventura County
We walk our clients through this every time we take a condo listing, and one of the most common mistakes we see is thinking of the HOA as the buyer's problem. It isn't. If a buyer's lender can't approve the project, the deal dies, and that delay or cancellation lands on the seller's timeline and often final sales price.
Some well-funded HOAs may already meet the higher reserve standard and experience little or no impact. While other associations may need to make changes to their budgets. That could potentially mean:
Higher monthly HOA dues.
An association may increase regular assessments to put more money into reserves.
A larger reserve contribution within the existing budget.
Some HOAs may be able to reallocate their budgets without a significant increase in monthly dues.
Special assessments.
In some circumstances, associations may turn to special assessments to address significant capital needs. Buyers should understand whether a special assessment has already been approved, is pending or is being discussed.
Financing complications.
If a condominium project does not satisfy the requirements of a particular conventional loan program, a buyer may need to explore another financing option—including a lender that offers non-warrantable condo financing.
This does not mean that every condo with less than 15% reserves automatically becomes “unfinanceable.” Project eligibility depends on the applicable loan program, lender review, project characteristics and other factors.
The new requirements raise the bar on what lenders will scrutinize before issuing a conventional loan approval on a condo. According to reporting on the upcoming changes, project-level issues that can render a condominium effectively “non-warrantable” for Fannie Mae or Freddie Mac financing include pending litigation, inadequate insurance, deferred maintenance, and delinquent HOA assessments. None of those are things a buyer can fix with a larger down payment.
Here's what we tell every seller: get ahead of the HOA documents before going on the market, not after you're in escrow.
Documents to pull now or as soon as you list:
Annual operating budget and the current-year financial statements including reserves percentage.
Reserve study, including the funding percentage and any recommended special assessments
Master insurance policy declarations page, confirming coverage type and limits
Litigation disclosure from the HOA board or management company
Assessment delinquency report showing the percentage of owners current on dues
Any pending or approved special assessments
Getting these in hand before you list does two things. First, it lets you identify problems early enough to address them, or at least price for them. Second, it removes a major source of escrow delays once you're under contract.
Your specific situation depends on which community you're in and who manages the association. Some HOA management companies turn documents around in days; others take weeks. That gap matters when a buyer's lender has a project-review deadline. This is exactly the kind of question I walk my clients through.
What Condo buyers in Conejo Valley need to know before buying
Our most helpful advice is to speak with a lender before you fall in love with a condo. The most important shift the new guidelines create for buyers is this: your lender now has to approve the building, not just you. A clean credit file, solid income, and a 20% down payment won't save a deal if the condominium association has unresolved litigation or a reserve fund that falls short of lending thresholds.
Buyers who want conventional financing need to have the specific building/ HOA evaluated by their lender before removing a financing contingency. If it fails lending standards, the alternatives are cash, portfolio loans, or other specialized financing, each of which carries different underwriting terms and pricing.
If you are considering a condo in Westlake Village, Thousand Oaks, Agoura Hills, Oak Park, Newbury Park or nearby communities, we recommend taking a proactive approach.
1. Talk with your lender before you shop seriously
Ask the lender what documentation they will need to evaluate the HOA and condominium project. Don't wait until you're in escrow to discover that the project requires additional review.
2. Have the HOA financially reviewed
Important documents can include:
Current HOA budget
Reserve information
Reserve study
HOA financial statements
Master insurance information
Meeting minutes
CC&Rs
Current or proposed special assessments
Information about pending litigation
Any notices involving major repairs or deferred maintenance
The lender will ultimately determine whether the project satisfies its underwriting requirements, but having the information available early can help identify potential problems before they jeopardize a transaction.
3. Ask whether the project has recently been reviewed
A condominium project that successfully financed another unit recently isn't necessarily guaranteed to qualify for your particular loan. Requirements change, and lenders may request updated documentation.
4. Don't assume every condo in the same community has the same financing options
Project-level issues can affect the financing of individual units. That's particularly important when comparing condos in different developments throughout the Conejo Valley.
Questions to ask your lender before you make an offer or even start looking at condos
Has this project been through your agency review, or will it need a full review?
What HOA documents do you need, and how long does your review take?
If the project doesn't qualify for conventional financing, what alternatives do you offer?
Does the January 4, 2027 effective date affect my loan if I'm already in escrow?
Those questions won't always have clean answers before you've identified a specific unit, but asking them early tells you whether your lender has a process for this.
At our local price points, a financing snag caused by a non-warrantable project is not a minor inconvenience; it can unwind a transaction entirely. Every situation is different, and the only way to know for sure how the January changes affect your specific building is to run the project details with a lender who knows the guidelines.
How Lydia Gable Realty Group Helps With Condo Transactions
At Lydia Gable Realty Group, our local experience with condominium communities throughout Westlake Village, Thousand Oaks, Agoura Hills, Oak Park, Newbury Park and the surrounding Conejo Valley allows us to help clients look beyond the listing photos and asking price.
For buyers, we can help identify better condominium opportunities, and work with your lender to determine what HOA and project information needs to be reviewed. We can also provide a list of condo communities that may be suitable for conventional financing based on available project information, while your lender makes the final financing determination.
If a property appears to have financing challenges, we can also recommend lenders who have experience with non-warrantable condominium loans and help coordinate the transaction so that the financing issue is addressed early rather than becoming a surprise later.
For sellers, our goal is to identify potential obstacles before the property goes on the market, not after you are already in escrow.
Our Clients Tell the Story
Our clients frequently mention the value of our local knowledge, communication and ability to make complicated transactions easier.
A recent Zillow review from a Westlake Village condo seller said:
“We were impressed with her knowledge of the real estate market in the area.”
Another recent review from a condo seller in Agoura Hills said:
“We cannot recommend them highly enough!”
And a recent condo buyer in Thousand Oaks described working with our team as:
“Very knowledgeable and quick to respond.”
These comments reflect something particularly important in condominium transactions: communication matters. When HOA documents, lender requirements, inspections, disclosures and deadlines are all moving at once, having an experienced local team coordinating the details makea a significant difference.
Why Local Condo Expertise Matters
Conejo Valley has a wide variety of condominium and townhome communities. From Westlake Village condos near the lake and shopping, to condominium communities throughout Thousand Oaks and Newbury Park, to developments in Agoura Hills and Oak Park, every HOA has its own financial structure, rules, insurance, maintenance history and capital needs.
Two condos with similar prices and monthly HOA dues can have very different financing considerations. That's why we encourage our clients to evaluate the entire condominium project, not just the individual unit.
If you're weighing whether to work with an agent who knows how to navigate HOA documentation and lender project review, you can read what past clients have said about the Lydia Gable Realty Group on Google and Zillow.
Frequently Asked Questions
What changes to condo financing take effect on January 4, 2027?
Fannie Mae and Freddie Mac are implementing updated condo project review requirements with an effective date of January 4, 2027, that expand what lenders must evaluate about a condominium association before approving a conventional loan. The changes place greater emphasis on reserve funding, insurance adequacy, deferred maintenance, litigation status, and HOA assessment delinquencies as project-level eligibility factors. Confirm the specific details and any exceptions with your lender or the applicable agency selling guide before relying on them for a transaction.
Will the January rule change affect a condo purchase already in escrow?
Whether an in-progress transaction is affected depends on when the loan application was submitted relative to the effective date and how your lender interprets the implementation guidance. Ask your lender directly whether your file is subject to the new requirements, and do not assume an existing escrow is insulated. Building extra time into your transaction for project-review steps is the safest approach regardless.
How can I find out whether a condo is warrantable?
The fastest route is to ask your lender to run a project eligibility check on the specific building before you make an offer. Lenders who regularly handle agency-backed condo loans can often identify known project approvals or flag likely issues early. The project-level factors that commonly disqualify a building include pending litigation, reserve shortfalls, insurance gaps, and high delinquency rates among owners, so pulling HOA financials early gives you a head start.
Can I still buy a condo if the association does not meet Fannie Mae or Freddie Mac standards?
Yes, but your financing options narrow. Buyers whose chosen project fails agency standards may be able to use cash, a portfolio loan, or other specialized financing, each of which comes with its own underwriting terms and pricing. Evaluate those alternatives with your lender before you remove a financing contingency, not after, so you understand the full cost of proceeding.
Will pending HOA litigation or an insurance problem prevent a buyer from getting financing?
It can. Pending litigation and inadequate insurance are both project-level issues that can make a condominium non-warrantable for conventional financing, regardless of the buyer's credit profile. The severity depends on the nature of the litigation and the specific insurance gap. Sellers who are aware of either issue should disclose it and discuss it with their agent before listing, since it will surface during lender project review.
The January 2027 changes make HOA financial health a first-order concern in any Conejo Valley condo transaction, not a footnote. Sellers who prepare their documentation now and buyers who get project review done before waiving contingencies will be in the strongest position when the new requirements kick in.
If you're buying or selling a condo in Westlake Village, Thousand Oaks, Agoura Hills, Oak Park, Newbury Park, or anywhere across the Conejo Valley, I'd be glad to walk you through exactly what this means for your transaction. Schedule a consultation and let's look at your specific situation together.
Lydia Gable leads the #1 Real Estate Team in Westlake Village and Conejo Valley, guiding buyers and sellers through every type of transaction across Thousand Oaks, Agoura Hills, Oak Park, Newbury Park, Calabasas, and Camarillo.
Lydia Gable at Compass · 818.383.4335
