Key takeaways
- Buying a condo in San Diego now depends as much on the building as on the borrower. In 2026 the lender underwrites both.
- Fannie Mae eliminated Limited Project Review for condos effective August 3, 2026. Most conventional condo loans now run through a fuller look at the HOA’s finances, insurance, and project eligibility.
- The standard reserve contribution for Full Review is scheduled to rise from 10% to 15% of annual assessment income in 2027, unless a project qualifies through an acceptable reserve-study alternative.
- A building that misses those standards is called non-warrantable. Financing may still exist – portfolio and non-agency programs – but generally with more down and a higher rate.
- Pull the HOA packet before you fall in love with the unit. It is the single cheapest thing you can do in this market.
Short answer: buying a condo in San Diego in 2026 means two approvals, not one. Your file has to work, and the homeowners association has to work. Since August 3, 2026, the shortcut most lenders used to lean on – Fannie Mae’s Limited Project Review – is gone, so the HOA’s reserves, budget, insurance, litigation, and owner-occupancy mix all get read before a conventional loan can move forward.
I have watched three condo files this summer where the borrower was never the problem. The building was. That is the shift worth understanding before you write an offer.
Who this is for
This one is for San Diego buyers looking at attached housing – a Little Italy high-rise, a North Park conversion, a Mission Valley townhome, a Carlsbad complex two blocks from the sand. It is for first-time buyers using a condo as the on-ramp, and for move-down buyers trading a yard for a lock-and-leave. If a condo is the only way the math works for you in this county, you deserve to know how the underwriting actually reads.
It is a fair thing to be frustrated about. You do everything right – save the down payment, keep the credit clean, get your documents in order – and then a stranger’s HOA board decides whether your loan happens. That is genuinely how it works now. The good news is that almost all of it is knowable in advance.
What actually changed on August 3, 2026
Fannie Mae and Freddie Mac released coordinated condo updates in March 2026 covering three areas: how projects get reviewed, how much associations must hold in reserves, and what insurance standards apply. The piece that landed first was the elimination of Limited Project Review, effective August 3, 2026.
Limited Review was the light-touch path. If a buyer put enough money down on a primary residence, the lender could skip most of the deep dive into the association. That path is closed for most transactions. What replaces it is Full Review – a real read of the HOA’s budget, reserve funding, delinquency rate, insurance coverage, pending litigation, commercial space percentage, and how much of the project is investor-owned.
Projects of ten units or fewer may qualify for a Waiver of Project Review. That waiver is not automatic, and the project still has to clear applicable eligibility and insurance requirements. Given how much of San Diego’s older coastal inventory sits in small conversions, this one is worth asking about early.
The 2027 reserve rule you should ask about today
Beginning in 2027, the standard reserve contribution requirement under Full Review is scheduled to move from 10% to 15% of annual assessment income, unless the project qualifies through an acceptable reserve-study alternative.
Translate that into plain English. If an association collects $600,000 a year in dues, the old benchmark meant roughly $60,000 a year going into reserves. The new one points toward roughly $90,000. Associations that are already thin have three ways to get there: raise dues, cut services, or commission a reserve study that supports a different funding level. Boards that do none of the three risk losing warrantable status – and when that happens, conventional financing for every unit in the building gets harder at the same moment.
So when you are touring a complex this fall, the question is not just “what are the dues?” It is “what is the reserve funding plan for next year, and has the board discussed the 2027 requirement?” Minutes will tell you. They almost always do.
The six documents to get before you write an offer
| Document | What you are looking for |
|---|---|
| Current HOA budget | Line item for reserve contributions, and whether it is funded from dues or from a special assessment |
| Reserve study | Percent funded, and the timing of big-ticket items – roof, elevators, plumbing, deck coatings |
| Last 12 months of board minutes | Litigation talk, dues increases, deferred maintenance, insurance renewal problems |
| Master insurance certificate | Coverage type and limits, and the deductible the association carries |
| Delinquency report | Share of owners more than 60 days behind on dues |
| Owner-occupancy and commercial mix | Investor concentration and how much square footage is retail or office |
You can request most of this during your contingency period, but the smarter move is to have your agent ask the listing side for the packet before you go under contract on a building you have questions about. A weekend of reading beats a canceled escrow.
What “non-warrantable” actually means for you
Non-warrantable is not a synonym for bad. It means the project does not meet Fannie Mae or Freddie Mac eligibility as written. Common reasons in San Diego: too much commercial square footage in a mixed-use building, an investor-heavy complex, an association in active litigation over construction defects, or reserves that simply are not funded.
Financing may still exist. Depending on the borrower and the project, that can mean portfolio loans, dedicated non-warrantable condo programs, bank-statement programs, or other non-agency options. These generally ask for a larger down payment and carry a higher rate than an agency loan, and not every project will qualify for them either. If a building you love turns out to be non-warrantable, the right question is not “can this be financed” but “what does the alternative cost per month, and am I comfortable with it for as long as I plan to own?”
Run the dues through the payment, not around it
Here is the part buyers consistently underweight. HOA dues are not a utility bill. Underwriting treats them as housing expense, dollar for dollar, exactly like principal and interest.
The 30-year fixed-rate mortgage averaged 6.71% in Freddie Mac’s Primary Mortgage Market Survey dated September 3, 2026, up from 6.66% the prior week; a year earlier it averaged 6.50%. The 15-year averaged 6.04%. Those are national averages, published weekly – not an offer, not a quote, and not what any particular file will be priced at.
At that national average, every $550 a month of HOA dues absorbs roughly the same monthly dollars as about $85,000 of additional mortgage. Read that again, because it reframes the whole search. A $650,000 condo with $550 dues is not competing against a $650,000 house. In monthly terms it is competing much closer to a $735,000 one.
An illustration, using that national average and rounding: a $650,000 condo with 10% down leaves a $585,000 loan. At 6.71% over 30 years, principal and interest runs about $3,779. Add roughly $596 for property taxes at about 1.1%, $550 in dues, an HO-6 policy, and mortgage insurance at that down payment, and you are meaningfully above $5,000 a month before a single light bulb. Your actual numbers will differ – this is arithmetic for illustration, not a quote.
When a condo is the wrong move – and I will tell you so
Not every buyer should be shopping attached housing this year, and I would rather say it here than on a call after you have written an offer.
- You are planning to move within about three years. Between closing costs, transfer costs, and a market that is more balanced than it was, a short hold rarely leaves room to come out ahead.
- The dues are already the stretch. Dues go up. Reserves are going to demand more from associations, not less. If today’s number is the ceiling, next year’s number is a problem.
- The reserve study shows a roof or elevator due in the next two years and the reserve is thin. That gap gets closed by a special assessment, and you will own it.
- You want to rent it out shortly after closing. Investor concentration is one of the things Full Review looks at, and an association’s own rental caps may bind before the lender’s do.
A condo is a very good answer to the San Diego affordability problem when the building is healthy and the hold is long. Those two conditions do most of the work.
How I would sequence it this fall
- Get your own financing picture straight first – income documentation, credit, assets, and a realistic monthly ceiling that already includes dues.
- Shortlist buildings, not just units. Ask about project review status before you tour a fourth time.
- Request the HOA packet and actually read the minutes. Twelve months takes an hour.
- Ask your lender to look at the project early rather than at underwriting. Finding out in week one is free; finding out in week three is not.
- Keep a backup building on the list. In a market with more inventory than we have seen in years, you have that luxury.
If you want the broader seasonal picture, I wrote about the San Diego fall buying window a few days ago, and the down payment question earlier this summer. Both pair well with this one. Our buyer guide walks the whole process start to finish.
Frequently asked questions
Can I still buy a condo with less than 20% down in San Diego?
Low-down-payment options for condos still exist, including agency and government programs. What changed is that the project review got stricter, not the borrower down payment tables. The building has to clear eligibility either way.
How do I find out if a building is warrantable before I make an offer?
Ask your lender to check the project early. Some projects carry a prior review status; others need a fresh look at current HOA documents. Either way it is a question best asked in week one.
What happens to my loan if the HOA loses warrantable status mid-escrow?
It depends on the reason and the timing. Sometimes the association can cure the issue – an updated insurance certificate, a corrected budget. Sometimes the file has to move to a non-agency program with different terms. This is exactly why the HOA packet belongs at the front of the process.
Are FHA and VA condo rules the same as Fannie Mae’s?
No. FHA and VA maintain their own condo project approval lists and standards, separate from the conventional changes described here. A building can be approved on one track and not another, which is worth checking if you are using a government loan.
Thinking about a San Diego condo this fall?
Let’s look at your numbers and the building’s numbers at the same time, before you write an offer. Start your pre-qualification here and we will talk through what the dues do to your range: buyerprequalify.com/rberg0
Ron Berg is the founder of The Berg Group, a San Diego mortgage team helping buyers, homeowners, and referral partners make financing decisions with the math in front of them. Questions about a specific building? Book a call or start at buyerprequalify.com/rberg0.
Sources: Freddie Mac Primary Mortgage Market Survey, survey dated September 3, 2026; Fannie Mae Selling Guide project eligibility requirements.
Ron Berg | NMLS #974839 | C2 Financial Corp, NMLS #135622 | Equal Housing Opportunity. Rates referenced are cited national averages published by Freddie Mac and are not offers, quotes, or commitments to lend. All loans subject to underwriting review; program terms and availability vary. This article is general education, not tax, legal, or financial advice.