Fannie Mae condo reserves: prepare the budget and the evidence.
Understand the lender’s reserve test before your board adopts its next budget.
What changes for 2027?
For Full Review loan applications dated January 4, 2027 or later, Fannie Mae increases the minimum replacement reserve allocation from 10% to 15% of annual budgeted assessment income.
What should the board calculate?
Compare the adopted budget’s annual replacement reserve contribution with its annual assessment income, using the lender’s applicable calculation. This is a budget allocation test, not simply a percentage of cash already in the bank.
| Illustrative assessment income | 10% contribution | 15% contribution |
|---|---|---|
| $200,000 | $20,000 | $30,000 |
| $600,000 | $60,000 | $90,000 |
Can a reserve study be used instead?
A qualifying study may support the reserve analysis. The budget must include its highest recommended reserve allocation; baseline funding is no longer acceptable. Ask the lender to confirm all study requirements.
A board preparation checklist
- Locate the adopted budget and reserve contribution schedule.
- Gather the full reserve study and subsequent updates.
- Identify differences between the study’s recommendation and the budget.
- Discuss funding options with the appropriate association professionals.
- Document board decisions and keep the updated file available.
A percentage alone does not establish that a project meets all eligibility requirements. Our project review puts the reserve documents alongside insurance, project conditions and governing documents.
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