A positive step toward stronger communities, healthier reserves, and more resilient properties.
Community associations across the country will soon benefit from updated lending and insurance standards issued by Fannie Mae and Freddie Mac.
These changes are designed to strengthen financial planning, improve long term maintenance, and ensure adequate insurance protection — ultimately supporting safer, more stable communities and protecting property values.
Key Updates
Reserve Study Requirements
- Associations must follow the highest recommended reserve contribution identified in their reserve study. (Effective 8/3/26)
- Minimum annual reserve allocation increases from 10% to 15% of the association’s budgeted income. (Effective 1/4/2027)
Positive impact: A stronger reserve contribution standard helps associations stay ahead of aging infrastructure and avoid deferred maintenance.
Master Property Insurance Requirements
Effective immediately; must be fully implemented by Jan. 1, 2027
Coverage Requirements
- Master policy must insure 100% of the replacement cost value of buildings and common elements.
- Acceptable documentation includes:
- Guaranteed or extended replacement cost coverage
- Insurer provided replacement cost estimate
- Insurance appraisal
- Statement from a qualified insurance professional
Coverage Type
- Policies must provide replacement cost coverage, except that roofs may be insured on an actual cash value basis.
- ACV is also acceptable for personal property and certain elements if issued by the insurer.
Deductible Limits
- Maximum allowable per unit deductible: $50,000.
- If a per unit deductible exists, owners must carry appropriate unit owner’s insurance.
What Boards and Managers Should Do Now
- Review your current reserve study and update if needed.
- Evaluate whether your budgeted reserve contributions align with the new expectations.
- Confirm your master insurance policy meets replacement cost and deductible requirements.
- Begin planning early—these changes support long term financial health and smoother lending eligibility.
- Call your insurance agent! We’re here to answer your questions and walk you through these new underwriting guidelines.
Reach out to the Condo, Community Association, and HOA insurance experts at Deeley Insurance Group today. Call or text our Community Association Advisor Melissa Esham at 410.213.5579.
