Freddie Mac Bulletin 2026-C states that the minimum condominium-project reserve allocation for capital expenditures and deferred maintenance will increase from 10% to 15% of annual budgeted assessment income for mortgages with Application Received Dates on or after January 4, 2027. The Bulletin is directed to Freddie Mac Sellers and Servicers and describes a project-review standard for conventional mortgages; it does not determine the reserve, budget, financing, or governance outcome for any individual association. 1
Educational information only. This article is a general summary of publicly available Freddie Mac materials. It is not legal, financial, lending, tax, accounting, investment, or compliance advice. It does not interpret governing documents or statutes, determine whether a project qualifies for financing, or recommend a decision for any association. Every project, lender review, governing-document set, and budget is different.
What changes on January 4, 2027?
Bulletin 2026-C says that the minimum reserve allocation for capital expenditures and deferred maintenance is increasing from 10% to 15% of annual budgeted assessment income for mortgages with Application Received Dates on or after January 4, 2027. The Bulletin says that the other requirements related to replacement reserves and budget-adequacy review remain unchanged. 1
The stated change concerns an annual budget allocation. It is not stated as a required percentage of cash that must already sit in an association’s reserve account.
How does Freddie Mac describe the percentage calculation?
Freddie Mac’s established-condominium-project Guide section describes the replacement-reserve percentage as the annual budgeted replacement-reserve allocation divided by the HOA’s annual budgeted assessment income, including regular common-expense fees. The Guide identifies several possible exclusions, including special-assessment income, income already allocated to reserve accounts, incidental income not used for maintenance operations or capital improvements, and certain pass-through utility or service amounts. 2
The Guide language is intended for Freddie Mac project review. It should not be read as a calculation or conclusion for a specific property.
What does the change look like in a simple illustration?
Illustration only; not advice or data from any association. If an association’s annual budgeted assessment income were $480,000, a 10% reserve allocation would be $48,000. A 15% allocation would be $72,000. The illustrative difference is $24,000 for the year, or $50 per unit per month if divided evenly among 40 units.
That illustration shows the arithmetic only. It does not identify an appropriate budget, assessment, reserve contribution, allocation method, or owner charge for any association.
Why can a Freddie Mac project-review standard matter to condominium communities?
A condominium project may be reviewed in connection with a unit-level mortgage transaction. Bulletin 2026-C frames its changes as updates to condominium-project review and eligibility requirements for Freddie Mac Sellers and Servicers. Whether a particular project or transaction meets those requirements is determined through the lender’s review and the applicable investor standards. 1
For an educational explanation of reserve-fund concepts separate from this Bulletin, see Altus Property Partners’ Illinois HOA reserve-fund overview.
What did Bulletin 2026-C say about reserve studies?
The Bulletin announced enhanced reserve-study requirements effective for mortgages with Application Received Dates on or after August 3, 2026, although Sellers may implement them immediately. It says that the project budget must include the highest recommended reserve allocation amount in the reserve study. It also says that the highest recommended amount may not be based on a baseline funding method in which the reserve cash balance approaches but never falls below zero. 1
Freddie Mac’s established-project Guide section describes reserve studies as including an inventory of major components, an evaluation of current reserve-fund adequacy, and a proposed annual reserve-funding plan. It also includes criteria applicable when a Seller relies on a reserve study for a project review. 2
What did the Bulletin say about owner occupancy?
Bulletin 2026-C says Freddie Mac retired the 50% owner-occupancy requirement for investment properties in established condominium-project reviews. It also says that related Project Waiver Request and feedback-message items in Condo Project Advisor and Loan Product Advisor will be retired on future dates. The Bulletin should be consulted for the full language, timing, and scope of those operational changes. 1
This update does not make this article a comparison of Freddie Mac, Fannie Mae, FHA, or any other lending program. Each program and lender may use different standards.
What are the educational planning topics boards often examine?
Reserve planning is more than a percentage. A reserve study commonly considers the components an association maintains, each component’s remaining useful life, estimated replacement cost, and a multi-year funding plan. In Chicago condominium buildings, these components can include roofs, masonry, porches, mechanical systems, water infrastructure, elevators, parking structures, common-area finishes, and life-safety systems.
Preventive maintenance is related but distinct. Maintaining records of inspections, routine service, water-intrusion follow-up, and completed work can help a community understand asset condition over time. It does not replace reserve funding or establish that a project satisfies any lender requirement. For a general operational overview, see preventive maintenance for Chicago properties.
Key terms used in this article
Annual budgeted assessment income. Assessment revenue that an association’s adopted budget anticipates collecting during a fiscal year. Freddie Mac’s Guide uses this figure in its replacement-reserve percentage calculation. 2
Replacement-reserve allocation. The amount an annual budget directs to reserves for capital expenditures and deferred maintenance. It is a budgeted contribution, not the same thing as a reserve-account balance.
Reserve study. A professional document that can inventory capital components, evaluate current reserve-fund adequacy, and present an annual funding plan. Freddie Mac’s project-review standards include specific conditions for a Seller relying on one. 2
Baseline funding method. A funding method described in Bulletin 2026-C as one where the reserve cash balance approaches but never falls below zero during the projection. The Bulletin says this method may not be used as the basis for the highest recommended reserve allocation amount in the stated reserve-study update. 1
Application Received Date. The date of a mortgage application used in Bulletin 2026-C to identify when particular updated standards apply. 1
A general educational takeaway
The published Bulletin gives boards, managers, owners, and other readers a specific future date and a specific percentage to understand. It does not replace a lender’s project review or an association’s own professional review of its documents, finances, and circumstances. Readers seeking information about Altus Property Partners’ association-management approach can explore condominium association management in Chicago.
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Frequently Asked Questions
What is Freddie Mac changing about condominium replacement reserves?
Freddie Mac Bulletin 2026-C states that the minimum reserve allocation for capital expenditures and deferred maintenance will increase from 10% to 15% of annual budgeted assessment income for mortgages with Application Received Dates on or after January 4, 2027.
Is the 15% figure a reserve-account balance requirement?
No. The Bulletin describes an annual budget allocation for replacement reserves. It is a contribution in the association’s budget, not a requirement that 15% of the budget be held as a reserve-account balance.
When does the 15% replacement-reserve standard take effect?
According to Bulletin 2026-C, the higher minimum applies to mortgages with Application Received Dates on or after January 4, 2027. Freddie Mac says its Guide will be updated to reflect the condominium-project changes.
Does a prior project review avoid the new requirement?
Bulletin 2026-C says a Seller with an unexpired project review completed before an effective date must still confirm compliance with new Guide requirements for applications received on or after that effective date.
What reserve-study update did Freddie Mac announce?
For certain mortgages with Application Received Dates on or after August 3, 2026, the Bulletin says the project budget must include the highest recommended reserve allocation in the reserve study and that allocation may not be based on a baseline funding method where the reserve cash balance approaches but never falls below zero.
What owner-occupancy update did Freddie Mac announce?
Bulletin 2026-C says Freddie Mac retired the 50% owner-occupancy requirement for investment properties in established condominium-project reviews. The Bulletin also describes planned retirement of related Condo Project Advisor waiver and feedback items.
Does this article determine whether a specific condominium project qualifies for financing?
No. This is a general educational summary of a published Freddie Mac Bulletin. A lender and the applicable investor determine project eligibility for a particular mortgage transaction.
What is a replacement-reserve allocation?
It is the annual budget amount directed to replacement reserves for capital expenditures and deferred maintenance. Freddie Mac’s calculation uses the annual budgeted replacement-reserve allocation divided by the HOA’s annual budgeted assessment income, subject to the Guide’s stated exclusions.
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