Why Project Standards Matter for Your Mortgage
When you buy a condo, townhome, or home in a planned community, you're not just buying your individual unit. You're buying into a project with shared ownership, common areas, and collective financial obligations. Fannie Mae recognizes that these projects carry risks beyond what you'd face with a detached single-family home.
Your individual creditworthiness might be perfect, but if the homeowners association is financially unstable or the project has legal problems, your mortgage becomes riskier. A condo building with deferred maintenance, a co-op facing litigation, or a PUD with inadequate reserves can all affect property values and your ability to sell later.
Say you're buying a unit in a 50-unit condo building. Even if you make every payment on time, problems like special assessments for major repairs, high vacancy rates, or disputes over common area management can impact the entire project's marketability. Fannie Mae's project standards exist to screen out these problematic situations before they approve loans.
The review process also protects you as a buyer. When your lender confirms that a project meets Fannie Mae standards, you gain confidence that the development is financially sound and properly managed.
How Project Types Determine Review Requirements
Fannie Mae categorizes projects based on several factors that determine how much scrutiny they require. The key distinctions are whether the project is new or established, attached or detached, and what type of ownership structure it uses.
Established projects get easier treatment because they have a proven track record. If at least 90% of units are sold to end users (not investors) and the project has been operating for at least one year, it qualifies as established. New projects face stricter requirements because they lack this operating history.
A 200-unit condo building that's been operating successfully for three years will face a simpler review than a brand-new development where only 60% of units are pre-sold. The established project has demonstrated financial stability, while the new one presents unknown risks.
Detached condos and small projects get the most lenient treatment. If you're buying a detached condo unit or a unit in a two-to-four unit condo project, Fannie Mae typically waives the full project review entirely. These smaller projects present fewer systemic risks than large attached developments.
What Documents Your Lender Needs to Collect
Your lender must gather extensive documentation to prove the project meets Fannie Mae requirements. The specific documents depend on the project type and review method, but common requirements include the project's legal documents, financial statements, and management information.
Legal documents include the declaration of condominium, covenants and restrictions, bylaws, and any amendments. These establish the project's legal structure and governance rules. Financial documents include the current budget, audited financial statements, and reserve study showing funds set aside for major repairs.
For a typical established condo project, your lender might need the HOA's most recent budget showing income and expenses, a reserve study completed within the last three years, proof of adequate insurance coverage, and the project's legal documents. They'll also need information about any pending litigation or special assessments.
The lender often uses Form 1076, the Condominium Project Questionnaire, to collect this information systematically. This form asks detailed questions about the project's finances, management, legal issues, and physical condition. While not required, most lenders use this form because it ensures they gather all necessary information.
Understanding the Different Review Methods
Fannie Mae offers several review methods depending on your project's characteristics. Full Review is the most comprehensive, requiring detailed analysis of all project documents and financial information. Limited Review applies to certain established projects and requires less documentation.
Full Review is required for all new attached condo projects and some established ones that don't qualify for Limited Review. The lender must analyze the project's legal documents, financial condition, physical condition, and management structure. This process can take several weeks and requires substantial documentation.
Limited Review applies to established attached condo projects that meet specific criteria related to loan-to-value ratios, occupancy type, and location. For example, if you're getting a primary residence loan with an 80% LTV on a unit in an established project outside Florida, Limited Review might be available.
Some projects qualify for review waivers entirely. If you're buying a detached condo unit, a unit in a two-to-four unit project, or a home in most PUD developments, your lender can skip the formal project review process while still meeting basic eligibility requirements.
Why Fannie Mae Cares About Project Financial Health
The financial stability of your project directly affects your mortgage's risk profile. A project with inadequate reserves, declining occupancy, or deferred maintenance creates risks that can affect all unit owners, regardless of their individual financial strength.
Fannie Mae wants to see that the HOA maintains adequate reserves for major repairs and replacements. A building with a 20-year-old roof but no money set aside for replacement presents obvious risks. Similarly, a project where 40% of units are behind on HOA dues signals financial distress that could affect everyone.
Consider a condo project where the HOA has been deferring elevator maintenance to keep monthly fees low. When the elevators finally break down, unit owners face a large special assessment. Units on higher floors become harder to sell, affecting values throughout the building. Fannie Mae's financial requirements aim to prevent these scenarios.
The guidelines also address owner-occupancy ratios because too many rental units can create management challenges and affect the project's stability. A project that's primarily investor-owned may have different maintenance standards and community involvement than one where most owners live in their units.
Common Issues That Can Derail Project Approval
Several red flags can cause a project to fail Fannie Mae's requirements. Pending litigation, especially involving the HOA or construction defects, often creates problems. Even if the litigation seems minor, it can delay or prevent loan approval until resolved.
Financial problems are another common issue. If the HOA is running significant deficits, has inadequate reserves, or faces high delinquency rates, the project may not qualify. Special assessments, particularly large ones for major repairs, can also create complications.
A condo project facing a $2 million special assessment for foundation repairs will struggle to meet Fannie Mae requirements. Even if individual unit owners can afford their share, the assessment affects the project's overall financial stability and marketability.
Insurance issues frequently cause problems. The project must maintain adequate coverage for the building and common areas. If the insurance is insufficient, has high deductibles, or excludes important coverage areas, it can disqualify the entire project.
Developer control can also create issues in new projects. If the developer retains too much control over the HOA or holds back too many units for rental, it may prevent the project from meeting Fannie Mae's requirements for established status.
Timeline Requirements and Expiration Rules
Project reviews have specific expiration dates that affect when your loan can close. Most reviews must be completed within one year of your loan's note date, but new projects have stricter requirements with reviews expiring after just 180 days.
If you're buying in a project that received Fannie Mae approval through their formal review process, that approval remains valid until its expiration date as shown in their system. However, if you're getting a loan in a project that required a Limited Review or Full Review by your lender, those reviews must be current when you close.
Say your lender completed a Full Review for a new condo project in January, but your loan doesn't close until August. Since more than 180 days have passed, the lender must update the review or complete a new one before your loan can close.
Your loan must also be delivered to Fannie Mae within 120 days of closing. If delivery takes longer, your lender must verify that the project still meets all requirements at the time of delivery.
What This Means for Your Home Purchase
Understanding these requirements helps you make informed decisions about which properties to consider and what timeline to expect. If you're looking at units in new developments or projects with obvious issues, factor in additional time for project review and potential complications.
Ask your real estate agent and lender about the project's approval status early in your search. A project that already has current Fannie Mae approval will close faster than one requiring a new review. Projects with known issues may not qualify for conventional financing at all.
If you're considering a unit in a project that's had recent special assessments, litigation, or financial problems, discuss these issues with your lender upfront. They can help you understand whether the project is likely to meet Fannie Mae requirements and what documentation might be needed.
Remember that your lender is responsible for ensuring project compliance, but problems discovered late in the process can delay your closing or force you to find alternative financing. The more you know about these requirements upfront, the smoother your transaction will proceed.
References
For the official guidelines, see B4-2.1-01: General Information on Project Standards in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
Fannie Mae and Freddie Mac update their rules several times a year. Get notified when changes affect your mortgage eligibility, required documents, or loan terms.
No spam · Unsubscribe anytime
Original Fannie Mae Guideline Text
B4-2.1-01, General Information on Project Standards (08/06/2025)
Waiver of Project Review
Requirements Applicable to All Properties in a Condo, Co-op, or PUD Project
Expiration for Project Reviews
Uniform Appraisal Dataset (UAD) 3.6 Policy
Fannie Mae’s Project Risk Overview
The quality of mortgages secured by units in condo, co-op, and planned unit development (PUD) projects can be influenced by certain characteristics of the project or by the project as a whole. Before delivering a loan secured by an individual unit in a project, the lender must determine that the project meets Fannie Mae's eligibility requirements.
Project eligibility risk is a risk that is distinct from the credit risk presented by individual borrowers. Units located in a project present risks that are also distinct from the risks associated with properties that are not part of a homeowners’ association (HOA) or project. These risks include the following:
the financial stability and viability of the project;
the condition and marketability of the project;
limitations on the unit owner’s ability to control the decision-making for the project, occupy the unit, or utilize the project’s amenities and common elements;
dissolution of the project and the unit owner’s resulting rights and responsibilities;
project-level litigation;
project-level misrepresentation and fraud;
the inability to cure a mortgage default due to restrictions in the project documents such as, but not limited to, right of first refusal provisions; and
insurance coverage that is inadequate to protect the project from unexpected losses.
Project eligibility and financial strength are key drivers of credit performance on individual unit mortgages and critical to the long-term success of the project. Fannie Mae’s project eligibility and underwriting requirements seek to mitigate project level risks and to ensure that projects are demonstrably well-managed.
Lenders that sell mortgage loans secured by units in a condo, co-op, or PUD project to Fannie Mae are expected to have staff that are knowledgeable about and qualified to evaluate the specific risks presented by these types of projects. The project review is in addition to the review the lender completes for underwriting the borrower, the transaction terms, and the individual unit appraisal.
Fannie Mae’s project standards requirements are intended to address common project types across a broad geographic range. If a lender determines that a project does not meet all of Fannie Mae’s project eligibility criteria, but feels that the project has merit and warrants additional consideration, the lender may request an exception (see
, for additional information).
Project Documentation
The documentation needed to complete a project review may differ depending on the project and review type. Lenders are responsible for determining the documentation needed to ensure that the project meets all of Fannie Mae’s eligibility requirements. Project documentation may include, but is not limited to, the following:
legal and recorded documents including the covenants, conditions and restrictions, declaration of condominium, or other similar documents that establish the legal structure of the project;
project budgets, financial statements, and reserve studies;
project construction plans;
architects’ or engineers’ reports;
completion reports;
project marketing plans;
environmental hazard reports;
attorney opinions;
appraisal reports;
evidence of insurance policies and related documentation; and
condominium project questionnaires.
Sources for project information include, but are not limited to, appraisers, HOAs, co-op corporations, management companies, real estate agents, insurance professionals, and project developers. Lenders are responsible for the accuracy of any information obtained from these sources.
Document Retention
Lenders must retain all of the project documentation needed to demonstrate that the project meets Fannie Mae’s eligibility requirements, including any documentation the lender relied upon to enter information into CPM. This documentation must be retained, and made available upon request, as long as lenders originate mortgages from the project, and until all mortgages sold to Fannie Mae have been liquidated.
Condominium Project Questionnaire
The Condominium Project Questionnaire (Form 1076) helps lenders collect data to determine condo project eligibility. This form is optional; however, lenders are encouraged to use and retain the form in the loan file. A substantially similar form may also be used in its place.
Project Types
The scope of Fannie Mae’s requirements and the specific eligibility criteria to be met are dependent upon various project types and/or loan level characteristics. The characteristics that define each project type are described in the following table.
Established condo project
A project for which all of the following are true:
A project may also be treated as an established project with less than 90% of the units sold to unit purchasers, provided the deficit is the result of the developer holding back units for rent. The following requirements must be met:
New condo project
A project for which one or more of the following is true:
Detached condo project
A project comprised solely of detached units or that comprises a mixture of attached and detached units and may be a new or established project.
Two- to four-unit condo project
A project comprised of two, three, or four residential units in which each unit is evidenced by its own title and deed. A two- to four-unit condo project may be either a new or established project and may be comprised of attached and/or detached units.
Manufactured home project
A project consisting partially or solely of manufactured homes.
Co-op project
A project in which a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.
Planned unit development (PUD) project
A project or subdivision that consists of common property and improvements that are owned and maintained by an HOA for the benefit and use of the individual PUD unit owners. The unit owners in the project have title to a residential property (lot and structure) and an interest in the HOA that owns or manages the common area and facilities of the PUD.
See
, for additional detail used in determining whether a project is new or established and subject to Fannie Mae’s PUD eligibility requirements.
Horizontal Property Regimes
Fannie Mae considers a development to be a condo project any time it is declared or filed as a horizontal property regime in accordance with local statutes. Exception is made, if the local statute provides for the horizontal property regime to be created as a PUD development and the project’s legal documents specifically state that the project is a PUD.
Lenders must determine if the subject unit is located in a condo or PUD and use the appropriate mortgage documents and appraisal forms.
Project Review Methods
Fannie Mae purchases or securitizes mortgage loans secured by units in condo, co-op, and PUD projects that meet Fannie Mae's eligibility requirements. To determine whether the project meets these requirements, a number of project review methods are available. Whether a project review method is allowable or required depends on
the number of units in the project (two- to four- or more than four);
the unit type (attached or detached);
the project type (condo, co-op, or PUD);
the project status (new or established); and
the mortgage transaction.
The characteristics that dictate which method to use are shown in the following table.
Project Review Methods
Attached condo unit in a new or newly converted project
Attached condo unit in an established project
Based on the LTV, CLTV, and HCLTV ratios, occupancy, and location (projects in Florida), these projects may be reviewed using a Limited Review.
Projects not meeting the Limited Review criteria must be reviewed using a
Unit in a new or established two- to four-unit condo project
Project review is waived, with the exception of some basic requirements that apply.
Detached unit in a new or established condo project
Project review is waived, with the exception of some basic requirements that may apply.
Unit in a co-op project
Established condo project consisting solely of multi-width manufactured homes not subject to a community land trust, deed restriction, ground lease, or shared equity arrangement
Full Review (without CPM)
Fannie Mae Review through the standard PERS process
Fannie Mae Review through the streamlined PERS process
Unit in a PUD project
Project review is waived, with the exception of some basic requirements that apply
Unit in a condo project approved by the FHA
FHA Project Approval (see
for additional details)
Note: Unless specifically noted in the above table, all references to manufactured homes may be single-width, multi-width, or a combination of both.
Waiver of Project Review
Fannie Mae does not require a thorough project review for several types of projects or loan transactions, including:
detached condo units;
units in a two- to four-unit condo project;
units in a PUD project, except for PUD projects consisting of single-width and/or multi-width manufactured homes subject to a community land trust, deed restriction, ground lease, or shared equity arrangement;
Fannie Mae to Fannie Mae limited cash-out refinances with LTV ratios less than 80%; and
high LTV refinance loans.
See
for additional information and for the requirements that apply when a project review is waived.
Requirements Applicable to All Properties in a Condo, Co-op, or PUD Project
All mortgages secured by units in condo, co-op, or PUD projects must comply with the following:
requirements specific to the project review method used to determine that project’s eligibility;
property eligibility requirements (described in Chapter B2-3, Property Eligibility);
priority of common expense assessments (described below); and
when an appraisal of the property is obtained, it must meet all applicable appraisal requirements (described in Chapter B4-1, Appraisal Requirements).
Priority of Common Expense Assessments
Fannie Mae allows a limited amount of regular common expense assessments (typically known as HOA fees) to have priority over Fannie Mae’s mortgage lien for mortgage loans secured by units in a condo or PUD project. This applies if the condo or PUD project is located in a jurisdiction that has enacted
the Uniform Condominium Act,
the Uniform Common Interest Ownership Act, or
a similar statute that provides for unpaid assessments to have priority over first mortgage liens.
The table below describes the permitted priority of common expense assessments for purposes of determining the eligibility of a mortgage loan secured by a unit in a condo or PUD project for purchase by Fannie Mae.
If the condo or PUD project...
Then...
is located in a jurisdiction that enacted a law on or before January 14, 2014, that provides that regular common expense assessments will have priority over Fannie Mae’s mortgage lien for a maximum amount greater than six months,
the maximum number of months of regular common expense assessments permitted under the applicable jurisdiction’s law as of January 14, 2014, may have priority over Fannie Mae’s mortgage lien, provided that if the applicable jurisdiction’s law as of that date referenced an exception for Fannie Mae’s requirements, then no more than six months of regular common expense assessments may have priority over Fannie Mae’s mortgage lien.
is located in any other jurisdiction,
no more than six months of regular common expense assessments may have priority over Fannie Mae’s mortgage lien, even if applicable law provides for a longer priority period.
Notwithstanding any provisions to the contrary in the Guide, which do not require the lender to represent or warrant compliance with Fannie Mae project legal document requirements, the condo or PUD project legal documents must evidence compliance with the above priority of common expense assessment requirements.
Delivery Requirements
When delivering a loan for a unit located in a project, the lender must provide the Project Type Code and any applicable special feature codes as shown in the following table. The lender must also report all other applicable special feature code(s), including those specified in a variance in the Lender Contract and in the
document on Fannie Mae's website.
Q
Limited Review—Established condo project
T
Fannie Mae-approved condo or PUD project, including those that:
V
Condo project review waived - for certain project and transaction types
1
2
Fannie Mae-approved co-op project, including those approved through PERS
588
Detached Condominium Unit
Used to identify detached units in an attached or detached condominium project
CPM ID Delivery Requirements
Lenders are required to deliver the CPM ID number in the field for "FNM Condominium Project Manager Project Identifier" (Sort ID 39) in ULDD for the following projects:
projects that require the use of CPM; or
Fannie Mae-approved projects that are delivered as Type T for condos or PUDs, or Type 2 for co-ops.
Lenders are encouraged to include the condo or co-op’s HOA or Project IRS Federal Tax Identification Number (TIN) in the loan file and in CPM.
Expiration for Project Reviews
Project reviews must meet the following timeline requirements.
Expiration of Project Review
Must have been completed within one year prior to the note date
Full Review for New Projects
Must have been completed within 180 days prior to the note date
Approved by Fannie Mae as reflected in CPM
Must be valid (unexpired) as of the note date*
Approved by FHA
Must be valid (unexpired) as of the note date
*A loan that receives a CPM Approved by Fannie Mae message in DU will retain the Approved by Fannie Mae status through the credit report expiration date specified on the DU Underwriting Findings report, unless the lender makes any changes to the CPM ID, project name, property address (state or zip code), or credit report. See
for additional requirements for loans that receive a CPM Approved by Fannie Mae message in DU.
Loans must be delivered to Fannie Mae within 120 days following the note date. When the elapsed time between note date and delivery date exceeds this limit, the lender may deliver the loan only if the project continues to meet Fannie Mae project eligibility requirements at the time of delivery.
Loans secured by units in a project that fails to meet Fannie Mae’s project eligibility requirements under the applicable review type as of the note date are eligible for delivery after the project comes into compliance with the eligibility requirements (provided all standard mortgage seasoning and other applicable requirements are met). For example, if a lender closes a loan in a new project for which the pre-sales are less than the pre-sale requirement, the lender may deliver the loan after the project’s pre-sales meet the Fannie Mae requirement (assuming the loan meets all other applicable requirements).
Uniform Appraisal Dataset (UAD) 3.6 Policy
Lenders using UAD 3.6 must follow the requirements in the
. SEL-2021-11 SEL-2021-02 SEL-2020-04 SEL-2019-07
