Building insights in under 1 minute
HOAs are facing increased insurance requirements and mortgage or lending restrictions, and now there are new Federal Reserve Study requirements from Fannie Mae tying all of these together.
Fannie Mae released an update to its project standards on March 18, 2026, significantly increasing the financial responsibility of associations to maintain adequate reserves for capital projects and deferred maintenance. They are encouraging immediate adoption of the new guidelines, but requiring some changes starting in August 2026, and the rest in January 2027.
A few notable points of these requirements:
- Baseline funding, or zero funds in reserves, can no longer be used as the minimum balance—meaning you must maintain reserve funds and can no longer rely on special assessments when funds are needed.
- Highest funding plan required; associations can no longer choose low, medium, or high funding options.
- A 15% minimum reserve contribution of the approved annual budget is now required.
- Full reserve study reviews (on site) will be required, replacing limited reviews (over the phone) beginning in August 2026.
These changes will significantly affect how reserve studies are prepared and used to plan for maintenance and repairs. They will also tie into insurance renewals and approved lender lists for buying and selling within your community. This suggests that if reserves are not adequate, insurance renewals, mortgages, and lending could become more difficult—or even be denied.
J2 doesn’t perform reserve studies, but we can recommend Reserve Specialists who do.
We are sharing this information to keep our HOA clients informed about these developing requirements and how they may connect with evolving insurance and lending practices. Insurance companies and banks now require well-qualified clients with a solid plan for ongoing maintenance and repairs.
Call us if you need maintenance or repair guidance.