By Benjamin Finnerty (S), REALTOR® (RS-83812) with Keller Williams Realty Maui · Kīhei, Maui · 808-481-9748

Quick Answer: As of August 3, 2026, Fannie Mae and Freddie Mac no longer allow “Limited Review” approval for condo projects with more than ten units, so lenders must run a Full Review of the association’s finances. Starting January 4, 2027, minimum reserve funding rises from 10% to 15% of budgeted assessment income. Both changes can affect Maui condo loans.

I’m Benjamin Finnerty, a REALTOR® in Kīhei with Keller Williams Realty Maui, and I focus on South Maui condos, so condo financing rules land on my desk constantly. If you’ve been watching listings in Kihei, Napili or Kaanapali and waiting until “the timing feels right,” this change is worth knowing about first. It has nothing to do with interest rates or list prices. It’s about whether Fannie Mae and Freddie Mac will back a mortgage on the building your future condo sits in. Because the vast majority of homes for sale on Maui are condominiums, this is not a niche technicality.

What changed in Fannie Mae and Freddie Mac condo financing rules?

The biggest shift: as of August 3, 2026, condo projects with more than ten units can no longer be approved through “Limited Review.” That lighter-touch path let lenders approve a loan by looking mostly at the buyer and the individual unit, without digging deeply into the association’s finances.

Every established project now has to go through a Full Review or qualify for a Waiver of Project Review. In a Full Review, the lender examines the HOA’s:

• Budget
• Reserve study
• Insurance coverage
• Board meeting minutes
• Delinquency records

Fannie Mae and Freddie Mac have been tightening these standards over the past year, and 2026 is when the changes really start to bite.

What is the new condo reserve requirement for 2027?

Starting January 4, 2027, the minimum reserve funding requirement rises from 10% to 15% of an association’s annual budgeted assessment income. The exception: a building with a current reserve study (completed within the last three years) that supports a different figure, where the association is actually funding to that number.

Longstanding rules still apply too. Projects with unaddressed critical repairs can be ineligible, and loans generally can’t be sold to Fannie Mae or Freddie Mac when more than 15% of units are 60 or more days delinquent on HOA dues.

Did any condo financing rules get easier?

Yes. The Federal Housing Finance Agency relaxed several requirements that could ease pressure on many associations:

Change	Detail
Master-policy deductibles	Capped at $50,000 per unit (effective July 1, 2026)
Roof coverage	Roofs may be insured at actual cash value rather than full replacement cost
Project review waiver	Expanded from projects of four or fewer units to projects of ten or fewer
Investor concentration	The old 50% investor-concentration limit was eliminated

Why do the new condo rules hit Maui harder?

The rules apply nationwide, but Maui’s condo stock makes them worth extra attention. Many popular complexes, the older, low-rise resort conversions in South and West Maui, were built in the 1970s and 80s. Salt air, humidity and near-constant sun accelerate wear on roofing, plumbing and concrete in ways mainland reserve estimates don’t always anticipate, and construction and materials costs here run well above the national average.

That makes it more likely an aging Maui association is sitting on a reserve study with real gaps, which is exactly what the Full Review is designed to catch.

Two other local forces add pressure: the shift of short-term rental units toward long-term use under the county’s zoning changes, which is altering the ownership mix and revenue picture inside many associations, and the insurance market disruption Hawaii condo owners have felt over the past couple of years. An association with a smaller income base, a bigger insurance bill and an outdated reserve study is exactly where a buyer could hit an unexpected financing snag.

What should Maui condo sellers and HOA boards do now?

Ask your board or property manager two questions: when was the last reserve study, and is the association funding at the level it recommends? Updating the study, tightening delinquency collection and keeping insurance documentation current is far less painful than learning a buyer’s loan fell through because the paperwork wasn’t ready.

My Take: What I’m Telling Condo Buyers and Sellers

Due diligence on the building matters as much as due diligence on the unit. Before you write an offer, not after, I’d ask for the association’s current reserve study, its most recent budget, proof of insurance and a delinquency report.

If the reserve study is more than three years old, or the association has a documented list of near-term repairs it hasn’t budgeted for, you want to know that before you’re under contract with a clock running. Pair up with a local lender and an agent who already know which buildings in your target area have their paperwork in order. That’s how you avoid falling for a condo and learning six weeks into escrow that the project can’t clear a Full Review.

Financing rules work alongside the other big carrying costs. Read my post on the hidden insurance costs of buying a Maui home in 2026 and check what higher mortgage rates mean for Maui buyers before you set your budget.

This is general information, not legal, lending or insurance advice. Please confirm your situation with your lender, insurance agent or a Hawaiʻi attorney.

Frequently Asked Questions

Can I still get a conventional loan on a Maui condo?

Yes, if the project qualifies. As of August 3, 2026, projects with more than ten units need a Full Review (or a Waiver of Project Review), so the association’s budget, reserves, insurance, minutes and delinquencies all matter.

What reserve level do condo associations need?

Starting January 4, 2027, the minimum rises from 10% to 15% of annual budgeted assessment income, unless a reserve study completed within the last three years supports a different figure and the association is funding to it.

How do HOA delinquencies affect my loan?

Loans generally can’t be sold to Fannie Mae or Freddie Mac when more than 15% of units are 60 or more days delinquent on HOA dues.

What is the new cap on master-policy deductibles?

$50,000 per unit, effective July 1, 2026.

Ask Benjamin

Whether you’re comparing West Maui condo complexes, wondering if your own building would hold up under a Full Review, or fitting all of this into a relocation or investment plan, I’m glad to talk it through, no pressure. I’m Benjamin Finnerty; call or text 808-481-9748 or email benjamin@the808team.com.