The condo mortgage rules changed on Monday. Miami is the most exposed market in America.

On Monday 3 August 2026, Fannie Mae and Freddie Mac permanently retired Limited Review — the process that let a buyer with a large enough deposit finance a condominium without anyone examining the building’s finances. It was, by one industry estimate, roughly 40% of all condo reviews. From Monday, effectively every unit in a building of more than ten units requires a Full Review, at every down-payment level. No market in the United States is more exposed to that change than this one.

What actually died on Monday

Limited Review was a shortcut, and it was the shortcut most Miami transactions ran on. If a buyer put down enough — and in a second-home or investment purchase that threshold was higher — the lender could approve the loan on a short questionnaire rather than a full interrogation of the association. Budget, reserves, insurance, delinquency rates, litigation, pending special assessments: under Limited Review, most of that was simply not examined.

From loan applications dated 3 August 2026, that path is gone. Every conventional loan on a unit in a building of more than ten units now runs through Full Review, regardless of how much the buyer puts down. Full Review means the lender examines the association’s budget, its reserve position, its insurance, its delinquency rate, its litigation and its assessment history — and can decline the project, not just the borrower.

That last point is the one buyers underestimate. A Full Review failure is not a credit problem. You can have a perfect file, a large deposit and a lender who wants to do the loan, and still not close, because the building did not qualify. And a building that fails for one buyer fails for the next one too.

Why Miami is the most exposed market in the country

Three things stack here that do not stack anywhere else at the same time.

Miami-Dade is condominium-dominant. In most American metros the condominium is a minority product. Here it is the default form of ownership across Brickell, Downtown, Edgewater, Miami Beach, Sunny Isles, Aventura and Key Biscayne. A financing rule that applies only to condominiums is, in this county, a rule that applies to the housing market.

The building stock is old where the money is. The oceanfront corridor from South Beach to Sunny Isles is substantially 1960s to 1980s construction. Those are precisely the associations most likely to have deferred, most likely to have run thin reserves, and most likely to have a structural or facade project in front of them rather than behind them.

Florida already did this to itself once. The post-Surfside structural-integrity reserve legislation forced Florida associations to confront milestone inspections and reserve funding on a statutory timetable. Fannie and Freddie are now applying a second, independent test on the same buildings from the lending side. An association can be compliant with Florida law and still fail a Full Review, because the two regimes measure different things.

The result is that Miami has an unusually large number of buildings where the units are desirable, the location is irreplaceable, and the financing is about to become difficult. That combination does not destroy value. It splits the market.

The part nobody is reporting: it is not all bad

The coverage has been uniformly gloomy, and it is incomplete. Two of these changes are straightforwardly good for large parts of Miami.

On 18 March 2026 the 50% investor-concentration cap was eliminated. That rule blocked conventional financing in any building where more than half the units were owned by non-occupants. In Brickell, Downtown and Edgewater — where investor ownership above 50% is normal rather than exceptional — that cap had turned entire towers into cash-only markets. Its removal reopens conventional financing to a large slice of inventory that has been financing-constrained for years.

The same date widened the Waiver of Project Review to buildings of ten units or fewer, up from four. That is a meaningful gift to small Art Deco and Miami Modern buildings on the Beach, provided they are independent and not folded into a master association.

So the honest read is not “condo financing got harder.” It is that financing got reallocated. Investor-heavy buildings with sound finances just got easier. Owner-occupied buildings with weak reserves just got much harder. The dividing line moved from who owns the units to how well the building is run — which is, arguably, where it should have been all along.

The $50,000 deductible cap is the sleeper

The change that has attracted the least attention may matter most in Florida.

From 1 July 2026, a project’s master property policy must carry a per-unit deductible of no more than $50,000. Roofs may now be written on an actual cash value basis rather than replacement cost, and the inflation-guard requirement has been dropped.

Here is why that cap is a Florida problem specifically. Windstorm deductibles in this state are frequently written as a percentage of insured value rather than a flat dollar figure. On a large coastal tower, a percentage-based windstorm deductible can translate into a per-unit exposure well beyond $50,000. An association can be fully insured, correctly advised and entirely solvent, and still hold a policy structured in a way that does not satisfy the new test.

The practical consequence is that some Miami associations will need to restructure their insurance — buy down the deductible, which costs premium — in order to keep their building financeable. That cost lands on owners, and it lands regardless of whether anyone in the building intends to sell.

Alongside it sits a quieter requirement: individual owners are expected to carry HO-6 policies covering the master-policy deductible gap. In buildings where HO-6 coverage has been treated as optional, it is now part of the financing chain.

The reserve maths, and the January deadline

The reserve rule is the slow-moving one, and it is the one associations still have time to fix.

For loan applications dated on or after 4 January 2027, a project must allocate at least 15% of its annual budgeted assessment income to replacement reserves, up from 10%.

There is one way out, and it is worth understanding precisely because it is an opportunity rather than a burden. An association can bypass the 15% formula entirely if it maintains a professional reserve study completed or updated within the previous three years and funds at the highest recommended level in that study.

Two related tightenings took effect on 3 August. The “baseline funding” method — the approach that keeps a reserve balance above zero rather than fully funding components — is no longer accepted. And the study must have been completed within 36 months of the lender’s project review, so a study from 2021 is not a study.

For a Miami association reading this in August 2026, the sequence is straightforward: commission a current professional reserve study, adopt the highest recommended funding level, and the 15% rule never applies to you. Do nothing, and on 4 January your budget has to carry 15% or your owners cannot sell to a financed buyer.

What this means if you are buying

Ask for the association’s financials before you write the offer, not after. Budget, reserve study and its date, current reserve balance, delinquency rate, insurance declarations page, litigation, and any assessment approved or under discussion. If a seller or association will not produce these, that is your answer.

Check the reserve study’s date first. Anything older than three years is functionally worthless under the new rules, and commissioning a new one takes months.

Read the deductible on the master policy. If it is expressed as a percentage rather than a dollar figure, work out what that percentage means per unit. That single line may determine whether the building is financeable in 2027.

Do not assume a large deposit protects you. Before Monday it did. Full Review applies at every down-payment bracket, so the buyer putting down 40% now faces the same project test as the buyer putting down 10%.

Ask the lender to review the project early. Project approval and borrower approval are separate questions on separate timelines, and the project one is now the slower and riskier of the two.

What this means if you are selling

Your buyer pool is now a function of your association’s paperwork. A building with a current reserve study, funded at the recommended level, a compliant insurance structure and clean financials will transact normally and will quietly gain a pricing advantage over its neighbours. A building without those things is heading toward a cash-only market, and cash buyers price the inconvenience.

If you sit on a board, this is the moment to act rather than to wait for January. The reserve study exemption is available now, it is cheaper than the alternative, and it is the difference between your owners being able to sell to a financed buyer and not.

If you are listing in the next six months, get the financing package assembled before you go to market. In this environment, a seller who hands a lender a complete association file is doing something most sellers are not, and it will show up in both speed and price.

The larger point

Every one of these rules traces back to the collapse of Champlain Towers South in Surfside in June 2021. The state responded with inspection and reserve legislation. The secondary mortgage market has now responded with underwriting.

What both responses share is a refusal to let a building’s deferred maintenance stay invisible. For five years the cost of a badly run association was carried quietly by its owners and revealed only when the bill arrived. From this week, it is revealed at the point of sale, to every buyer, by their lender.

That is uncomfortable in the short run and correct in the long run. A market that prices building quality is a healthier market than one that does not. Miami is simply going to feel it first, and hardest, because Miami has more of these buildings than anywhere else.