Brief · HOA boards and managers

January 4: Is Your Building Ready?

Condos of LA · Updated October 27, 2026 · General information, not legal advice

condosofla.com/hoa-board-brief-2027 · Updated October 27, 2026 · Tyler Drinkwater, Revel Real Estate, DRE 02112336 · Michael Druker, Douglas Elliman, DRE 02023164 · (310) 881-8759

From January 4, 2027, a conventional loan in a condo building over 10 units requires the HOA to budget at least 15% of its assessment income to reserves, or fund its reserve study’s highest recommendation. Your 2027 budget is the one lenders will test, and calendar-year associations are sending it now.

Two printed pages for boards and managers to share. General information only, not legal advice: talk to your association’s attorney and reserve study provider before changing the budget.

15%of assessment income to reserves, for conventional loan applications dated on or after January 4, 2027 (10% before).

Dec 1Last day for calendar-year HOAs to send the 2027 budget report. The window opened October 2 (Civil Code 5300).

11+ unitsFull Review for every conventional loan since August 3, 2026. 2 to 10 units may qualify for a waiver.

Prints on about 2 pages

1. The 15% line, or the reserve study at its highest recommendation
2. The 2027 budget window is now
3. Check your status in Condo Status Finder
4. What lenders will ask about
5. Document the fixes

1. The 15% line, or the reserve study at its highest recommendation

It’s a budget-line test: the reserve contribution in the budget divided by assessment income. The bank balance doesn’t count, and neither does special assessment income. Baseline reserve study funding stopped counting on August 3, 2026 (Fannie Mae LL-2026-03, Freddie Mac Bulletin 2026-C).

Work out your 2027 reserve line.15% for conventional loan applications dated on or after January 4, 2027; 10% before. It applies to buildings that get a Full Review (11 or more units).
If it’s under 15%, pick the path: the budget, or the reserve study.A budget vote can fix the line item. Raising dues more than 20%, or assessing more than 5% of budgeted expenses, needs a member vote (Civil Code 5605).
Plan on no grandfathering.A buyer’s loan application date triggers the test, and Freddie Mac says even an unexpired project approval gets rechecked against the new rules.
Don’t count on a delay.Trade groups asked FHFA for a one-year delay in July 2026. We found no decision as of October 27, 2026.

The math: a building that collects $600,000 a year in dues needs at least $90,000 budgeted to reserves to clear 15%. At $60,000 it clears today’s 10% line and misses the January 4 line. Try your building’s numbers in the 15% Reserve Test.

2. The 2027 budget window is now

Calendar-year HOAs send the 2027 budget report between October 2 and December 1, 2026.It’s due 30 to 90 days before the fiscal year ends (Civil Code 5300). Other fiscal years run on their own dates.
Include the reserve summary and percent funded.Buyers and lenders read the Assessment and Reserve Funding Disclosure Summary first (Civil Code 5570).
State any anticipated special assessments plainly.The budget report has to say whether assessments are expected, and every buyer’s lender reads it.
Note AB 2050 for the long run.California’s first minimum reserve contribution rules become operative January 1, 2032.

3. Check your status in Condo Status Finder

Register for Fannie Mae’s Condo Status Finder.It’s free for boards, managers and their authorized advisors. Buyers and agents can’t use it, and the Unavailable list isn’t public.
If the building shows as Unavailable, find out why.Fannie says it has updated the status of more than 2,000 projects since 2022 after the issue was fixed and documented.

4. What lenders will ask about

Since August 3, 2026, every conventional loan in a building over 10 units gets a Full Review. Lenders typically need the full condo questionnaire (Form 1076), the budget, the reserve study and the insurance.

Critical repairs, including SB 326 and retrofit orders.A failed or unaddressed balcony inspection, or an open retrofit order, can count as a critical repair. The first SB 326 inspection was due January 1, 2025, then every 9 years.
Unfunded repairs over $10,000 per unit due within 12 months.They fail the review. A documented funding plan is what changes the answer.
Delinquency.More than 15% of units 60 or more days behind on dues or an assessment fails a Full Review.
Insurance.The master policy has to meet the rules. The per-unit deductible is capped at $50,000 for applications from July 1, 2026.
Litigation, commercial space, single-owner concentration and short-term rental use.Each has its own limit in the Fannie Mae Selling Guide (August 5, 2026).
A fast, complete questionnaire.Every owner who sells to a conventional buyer needs one. Its turnaround sets the pace of their escrow.

5. Document the fixes

Record repair and funding decisions in the minutes.Buyers read 12 months of minutes, and lenders read the budget that follows them.
Keep engineer sign-offs, contracts and completion certificates with the records.Fannie updates a building’s status when documentation shows the fix.
Tell owners what changed.Every owner who sells needs these documents. Forwarding this brief is a start.

Stay in touch on the January 4 changes

For board members and managers. Leave your email and Tyler or Michael will follow up personally, including when the rules or the lender guidance change. The brief itself is right here: print it or save it as a PDF.

The rules behind this brief

General information only, not legal advice. Rules are as of October 27, 2026 from Fannie Mae (Selling Guide, August 5, 2026; LL-2026-03), Freddie Mac (Bulletin 2026-C) and the California Civil Code. Lenders apply their own overlays, and only a lender’s review decides whether a loan works in a building.

Questions about your building? condosofla.com/building-check or (310) 881-8759. General information only, not legal advice. Talk to your association’s attorney and reserve study provider before changing the budget. Sources: Fannie Mae Selling Guide (August 5, 2026) and LL-2026-03, Freddie Mac Bulletin 2026-C, California Civil Code 4525, 5300, 5551, 5570, 5605, as of October 27, 2026.

Good to know

Frequently asked questions

Does the 15% reserve rule apply to our HOA?

It applies when an owner’s buyer uses a conventional loan with an application dated on or after January 4, 2027, in a building that gets a Full Review (11 or more units). Buildings of 2 to 10 units may qualify for a waiver of project review. Jumbo and non-QM lenders set their own rules.

Can we fix a low reserve line in the 2027 budget?

Usually, yes. It’s a line item: the reserve contribution divided by assessment income. The other path is funding a current reserve study at its highest recommended level. Dues increases over 20% need a member vote (Civil Code 5605). Talk to your association’s attorney and reserve study provider.

How do we check whether our building is on Fannie Mae’s Unavailable list?

Boards, managers and their authorized advisors can register for Fannie Mae’s free Condo Status Finder. The list isn’t public, and Fannie updates a project’s status when the HOA documents a fix.

Want a second set of eyes on your building?

Send us the building. We’ll show you what lenders will look at and what to document.

Board or manager building check