As of August 3, Fannie Mae and Freddie Mac eliminated the streamlined review process that most condo loans used to sail through on. Nearly every condo transaction now requires what's called a Full Review, which means the lender isn't just underwriting the buyer anymore. They're underwriting the building. San Diego has no shortage of condos, so this is worth understanding before you list one or make an offer on one.
What Changed
Under a Full Review, the lender digs into the HOA's reserve funds, insurance coverage, deferred maintenance, special assessments, and owner-occupancy ratio before approving a loan. If the building doesn't hold up under that scrutiny, the loan can't be sold to Fannie Mae or Freddie Mac, and it becomes what's known as a non-warrantable condo. Financing is still possible through a portfolio lender, but usually at a higher rate and with a bigger down payment.
Why This Matters if You're Selling
A condo that was easy to finance a year ago might not clear underwriting today, especially if the HOA has underfunded reserves or deferred maintenance sitting on the books. Fewer buyers will qualify for conventional financing, which shrinks the buyer pool and can slow down or derail a sale.
The common mistake is listing a condo the old way: put it on the market, wait for an offer, and deal with the HOA paperwork once the lender asks for it. That worked well enough under the old streamlined review, but Full Review closes the gap. If the reserve study, budget, insurance certificate, and litigation history aren't pulled and reviewed before the property goes live, the problem doesn't surface until a buyer is deep into escrow and the lender comes back with a denial. By then you've lost time, lost the buyer, and possibly lost your next home's timeline too.
I pull the HOA's financials, reserve study, and insurance documents before a condo ever hits the market, not after an offer comes in, and I work with a small group of preferred lenders who already know how to underwrite Full Review condos correctly. If a building is going to be a problem, better to know before it goes live than five weeks into an escrow that's about to fall apart.
Why This Matters if You're Buying
If a condo is on your list because it fits the budget better than a single-family home, this change affects you directly. If the building you like doesn't pass Full Review, your financing options narrow and the numbers can shift fast. It's also worth building extra time into your timeline, since Full Review takes longer than the old process did.
What's Coming Next
There's a second wave coming in January 2027, when reserve funding requirements jump from 10 percent to 15 percent of an association's budget. Buildings that aren't prepared for that increase may face special assessments to catch up, which is one more thing worth checking before assuming a condo is the more affordable choice.
The Bottom Line
None of this takes condos off the table. It just means the due diligence has to happen earlier than it used to, before a listing goes live or an offer gets written. If you're thinking about buying or selling a condo in San Diego, I'm happy to run the building through a quick check first.
This article is for general informational purposes only and is not a recommendation based on, or limitation related to, race, color, religion, sex, familial status, national origin, disability, or any other characteristic protected under federal, state, or local fair housing law. Lending guidelines and HOA requirements change and should be verified with a licensed mortgage professional for your specific transaction.