The short answer
From August 3, 2026, Fannie Mae retired Limited Review for most loans, so more unit sales trigger a full look at the budget. A reserve study used to justify a contribution under 10 percent can no longer rely on baseline funding, and the study's highest recommendation must be used.
Massachusetts law has never put a number on condominium reserves. Section 10(i) of Chapter 183A asks for an adequate fund and stops there. For many associations the number that actually matters comes from the secondary mortgage market, and in 2026 Fannie Mae changed how it is checked.
On March 18, 2026 Fannie Mae announced updated project standards and property insurance requirements, with effective dates phased over the following months. Its FAQ on project standards, updated the same month, sets out the parts that touch reserves. This article walks through them for a Massachusetts board.
The test that has not changed
The starting point is familiar. Fannie Mae looks for a minimum annual budgeted replacement reserve allocation of 10 percent. The FAQ explains the arithmetic: divide the yearly amount budgeted to replacement reserves by the association’s yearly budgeted assessment income.
A Brookline association with $180,000 of budgeted common charges needs at least $18,000 a year on its reserve line to pass. The test reads the budget, not the bank balance. An association with a large reserve and a small contribution can fail it; one with a thin balance and a healthy contribution can pass.
Where the contribution falls short, a lender may instead rely on a reserve study, provided the study meets the Selling Guide’s requirements, the lender keeps it with its own analysis, and the association’s funded reserves meet or exceed what the study recommends. Lenders are not required to use studies.
Change one: Limited Review is retired
For loan applications dated on or after August 3, 2026, Fannie Mae says the Limited Review process is being retired. Limited Review let many loans on established condominiums, typically where the buyer put down a larger deposit, go through with a light look at the project. Its retirement means more of those loans now go through a full review, or another route Fannie Mae allows.
For a Massachusetts board the practical effect is simple. More of your sales will produce a lender questionnaire asking about the budget, the reserve allocation, special assessments and deferred maintenance. Associations that used to see one or two full reviews a year may now see one with nearly every sale.
Change two: no baseline funding in the exception
Reserve studies offer different funding goals. The FAQ defines baseline funding as keeping the reserve cash balance from ever falling below zero. It is the thinnest goal a study can use, and it was a common way to show that a contribution under 10 percent was still enough.
For loans with application dates on or after August 3, 2026, Fannie Mae says that when a reserve study is used as an exception to the reserve requirement, lenders cannot use the baseline funding method. The FAQ adds that the highest recommendation in the study must be used. If your study offers a baseline plan and a fuller plan, a lender will look at the fuller one.
What else is coming
Fannie Mae’s announcement describes further changes on later dates, running into 2027. Lenders and their underwriters track the Selling Guide closely; the association does not need to read every update, but the board should ask its manager to confirm, before each budget season, which version of the reserve test lenders are applying.
What a Massachusetts board can do now
Check the ratio in the draft budget
Before the budget goes to owners, divide the reserve line by the assessment income. If the answer is under 10 percent, decide deliberately whether to raise the contribution or rely on a study, rather than finding out from a buyer’s lender.
Look at the funding goal in your study
Open the most recent reserve study and find the funding plan. If the contribution the board adopted is the baseline figure, it may not support a lender exception any more. Ask the firm that prepared the study whether an update can show a threshold or full funding plan, and what contribution each would need.
Keep the study current
A study prepared years ago, with old prices and no recent site visit, is weak evidence for any purpose. Many boards update with a site visit every three years and refresh the numbers in between, which is the cycle the Community Associations Institute’s reserve standards treat as good practice.
Prepare the questionnaire answers once
Most lender questionnaires ask the same things. A short pack with the approved budget, the reserve balance from the latest manager’s report under section 10(f)(1), the study summary and a note on any special assessment saves the manager hours on every sale.
Where Chapter 183A fits
None of this changes Massachusetts law. Owners can still, under section 10(m), modify the reserve requirement by a 67 percent vote taken each year. But a vote cannot change what a buyer’s lender sees, and the 2026 changes put the budget in front of lenders more often. The most reliable answer remains a funded reserve backed by a current study.
If your association needs a new study or an update before the next budget, get a quote. We will name one firm that covers your town, and pass on your request only if you agree.