Condominium and Common Interest Community Project Eligibility

Updated 2026-05-17

This page describes the various definitions, requirements, and review processes for condominium projects and other Condominium and Common Interest Community Project Eligibility as they relate to mortgage lending and regulatory compliance. These requirements are set by entities such as Freddie Mac, the Department of Veterans Affairs (VA), and the Consumer Financial Protection Bureau (CFPB).

Definition and Regulatory Context

Common Interest Communities (TILA HPML Escrow Rule)

For the purposes of the TILA HPML Escrow Rule, Common Interest Communities refer to properties such as condominiums, planned unit developments (PUDs), and other similar communities.

A specific exemption exists for these communities: creditors are not required to escrow homeowner's insurance premiums for loans secured by properties in common interest communities where the consumer must participate in a governing association that is required to purchase a master policy insuring all dwellings. This exemption recognizes that the master policy typically covers the property insurance needs for individual units, making individual escrow for property insurance premiums redundant.

Citation: 12 CFR § 1026.33(b)(1)

Condominium Unit Mortgages and Project Reviews

Condominium unit mortgages are loans secured by individual units within a condominium project. These mortgages are subject to specific eligibility and review requirements by secondary market participants like Freddie Mac to manage the unique risks associated with condominium ownership.

Condominium project reviews are the processes by which secondary market entities assess the eligibility of a condominium project for mortgages they will purchase. These reviews ensure that the project meets specific criteria related to its financial health, physical condition, occupancy, and legal structure, thereby mitigating risk for the investor. Lenders must determine which review type applies to a given project and retain all related documentation. Projects deemed ineligible (e.g., condo hotels, timeshares, projects in litigation) are not eligible for sale to Freddie Mac.

Freddie Mac Condominium Project Review Types

Freddie Mac's framework for condominium project reviews includes several types, each with distinct eligibility requirements. If the requirements for one review type are met, the seller is generally not required to comply with the requirements for other review types.

1. Established Condominium Projects

Established Condominium Projects are condominium developments that meet specific criteria set by Freddie Mac.

General Eligibility Requirements (Freddie Mac Guide Section 5701.5):

• Project Definition: The project must meet the definition of an established condominium project (found in the Freddie Mac Guide Glossary).
• General Eligibility: The project must meet the general condominium project review and eligibility requirements in Guide Section 5701.2.
• Owner-Occupancy: No owner-occupancy requirement for primary residence or second home units. Specific requirements apply to investment units (Guide Section 5701.5(b)).
• Project Budget: The current fiscal year's budget must be consistent with the project's nature, with appropriate assessments established (Guide Section 5701.5(c)).
• Delinquency Thresholds:
  • No more than 15% of units are 60 or more days delinquent on HOA assessments.
  • No more than 15% of units are 60 or more days delinquent on each special assessment.
• Manufactured Homes: Specific information is provided in Guide Section 5701.5(f).

2. New Condominium Projects

New Condominium Projects are condominium developments that meet specific criteria for recently constructed or developed projects.

Eligibility Requirements (Freddie Mac Guide Section 5701.6):

• Project Definition: The project must meet the definition of a new condominium project (found in the Freddie Mac Guide Glossary).
• General Eligibility: The project must meet the general condominium project review and eligibility requirements in Guide Section 5701.2.
• Completion of Legal Phases: Specific information in Guide Section 5701.6(a).
• Pre-sale/Owner Occupancy: Requirements in Guide Section 5701.6(b).
• Project Budget: The project’s budget (or projected budget) must be consistent with the project's nature, with appropriate assessments established (Guide Section 5701.6(c)).
• Reserve Study: Requirements for a reserve study, if applicable, are in Guide Section 5701.6(k).
• Working Capital Fund: Requirements for a working capital fund, if applicable, are in Guide Section 5701.6(l).
• Delinquency Thresholds:
  • No more than 15% of units are 60 or more days delinquent on HOA assessments.
  • No more than 15% of units are 60 or more days delinquent on each special assessment.
• Other Requirements: Refer to Guide Section 5701.6 for additional requirements.

3. Streamlined Reviews

Freddie Mac Streamlined Condo Reviews simplify the eligibility process for certain established condominium projects.

Eligibility Requirements (Freddie Mac Guide Section 5701.4):

1. Project Status: The condominium unit must be in an established condominium project.
2. General Eligibility: The project must meet the general condominium project review and eligibility requirements in Guide Section 5701.2.
3. Maximum LTV/TLTV/HTLTV Ratios: Specific maximum ratios apply based on occupancy type and project location:
   • Projects not located in Florida:
     • Primary Residence: 90% LTV/TLTV/HTLTV
     • Second Home: 75% LTV/TLTV/HTLTV
     • Investment Property: 75% LTV/TLTV/HTLTV
   • Projects located in Florida:
     • Primary Residence: 70% LTV, 90% TLTV, 90% HTLTV
     • Second Home: 75% LTV, 75% TLTV, 75% HTLTV
     • Investment Property: 70% LTV, 75% TLTV, 75% HTLTV
4. Delinquency Threshold: No more than 15% of units can be 60 or more days delinquent in the payment of each special assessment.

4. Reciprocal Project Reviews

Freddie Mac Reciprocal Condo Reviews allow Freddie Mac to purchase mortgages in condominium projects approved by Fannie Mae or FHA.

Fannie Mae-Approved and Certified Projects (Freddie Mac Guide Section 5701.9(a)): Freddie Mac will purchase mortgages if the project has an "Approved by Fannie Mae" status in Fannie Mae’s Condo Project Manager™ (CPM™), or if the Seller approved it as a Fannie Mae "Full Review" and received a "Certified by Lender" status in CPM™. The mortgage must comply with Fannie Mae eligibility requirements, the approval must not have expired, and the mortgage file must contain documentation of Fannie Mae’s approval. The project must also comply with Freddie Mac's general project eligibility requirements (Guide Section 5701.2(b)).

FHA-Approved Project Review for Condominiums (Freddie Mac Guide Section 5701.9(b)): FHA condominium project approval can only be used to determine project eligibility for mortgages secured by 1-unit residential dwellings if the mortgages are:

• FHA Mortgages
• VA Mortgages
• Section 502 Guaranteed Rural Housing (GRH) Mortgages
• HUD-Guaranteed Section 184 Native American Mortgages
• Conventional Mortgages in a project that appears on the list of projects approved through the FHA HUD Review and Approval Process (HRAP). Additional Seller requirements for FHA-approved projects are in Guide Section 5701.9(b).

5. Exempt From Review

Certain condominium unit mortgages do not need to comply with the full project eligibility requirements, such as those in 2- to 4-unit projects, detached units, or specific refinance types.

6. Project Certified Status PAR Finding

Projects that receive a "Project Certified" status from Freddie Mac's Condo Project Advisor® are eligible for a Project Certified Submission (PCS) review.

VA Condominium Approval

For a VA Loan Entitlement, Certificate of Eligibility (COE), and Loan Guaranty Certificate (LGC) to be used to purchase a condominium, the condominium project must be approved by the VA. This requirement ensures that the condo project meets specific standards set by the VA. Not all condominium projects are VA-approved, so Eligible Veterans, Eligible Active Duty Servicemembers, or Borrower (Consumer) interested in purchasing a condo with a VA loan should verify the project's approval status with their real estate agent or lender.