Condo Financing 101
Originating condominium loans in 2026 requires a more meticulous approach than standard single-family residential (SFR) lending. Because the collateral is tied to a shared entity, a lender’s risk isn’t just the borrower’s credit—it’s the financial and physical health of the entire Homeowners Association (HOA). Condominiums come in all shapes and sizes, but at their core, there is always shared ownership and shared liability.
Here are some best practices for mortgage lenders to ensure "warrantable" status and smooth originations.
1. Understand the different Project Review Types
Before diving into the borrower's financials, you must determine which review path the project requires. Missing this step early can lead to dead-end applications. CondoAnalytics has safeguards built into our platform to ensure our clients always get the correct review type, but if you’re doing this internally, know the difference between these. Getting the required documents from HOA’s and insurance agents early in the loan cycle can prevent closing delays and reduce headaches at closing.
Limited Review: This is the "fast track" with fewer documentation requirements for established projects with high down payments. Generally speaking, the risk of the loan is lower due to the higher down payment in the eyes of the GSE’s. Limited Review type requires review of the Questionnaire and Master Property Insurance at a minimum.
Full Review: Required for new projects or loans with lower down payments. This requires a deeper dive into the HOA’s financials, insurance, and legal structure. Safety, soundness, and security are the three “S’s” of Fannie Mae. The Full Review type would require the Questionnaire, Budget, Governing Docs, and Master Property/Liability/Fidelity Insurance. To account for the risk of a higher LTV, a more thorough review of the financial health of the project is required here.
2. Implement a "Condo Questionnaire" Protocol
The Condo Questionnaire is your most important tool. To avoid closing delays:
Order it early: Every lender operates differently, but it can take potentially weeks for an HOA or property manager to fill out your questionnaire, so it is best to order as soon as possible to set expectation for questionnaire release and manage expectations for closing. At CondoAnalytics, we prefer the FNMA 1076 Questionnaire. Fannie only requires the 1076 or a ‘substantially similar’ questionnaire, but best practice is to just obtain what Fannie offers. Common acceptable alternatives would be the questionnaire forms provided by services such as Homewise or Condocerts. Using alternative/in-house questionnaires can cause delays in the auditing process.
ORDER AN ADDENDUM: The addendum section of the 1076 questionnaire is a must have for conventional project reviews. The addendum questions must be answered sufficiently on the questionnaire form, or an equivalent. There is alternative info that can be obtained to satisfy the addendum responses via a reserve study and meeting minutes, but that is best left as a last resort if the addendum responses are unsatisfactory. Projects that will not sufficiently answer the addendum questions do not meet FNMA/FHLMC requirements.
Remember—reviewing a condo may not be your highest and best use. Over the past 5 years, the condo review has become an entire function of its own and as time consuming as underwriting a borrower’s credit. At CondoAnalytics, we can take the condo conundrum off your plate so you can focus on closing deals. Contact info@condoanalytics.com to get set up today!
Nick De Santis, AMP
Director of Business Development
Condoanalytics