Since August 3, 2026, a conventional loan on a condo in an established Scottsdale complex usually requires the lender to review the homeowners association, along with the buyer. Fannie Mae ended its "Limited Review" process for loan applications dated on or after that day. Freddie Mac ended its matching "Streamlined Review" on the same date. As a result, the HOA's budget, reserve plan, insurance and repair history now sit inside the loan file. A unit can be priced right and staged well and still lose a financed buyer because the association's paperwork falls short.
For anyone selling or buying a condo or townhome in Scottsdale this fall, the documents describing the building's finances now matter as much as the unit's finishes.
What Changed On August 3
Limited Review gave lenders a shortcut for established condo projects. A buyer purchasing a primary residence could qualify with as little as 10% down. Second-home and investment buyers could use it with 25% down. Under that path, lenders generally did not collect the association's full budget, reserve study, meeting minutes or detailed financial statements. Those buyer profiles fit many of the second-home and seasonal purchasers who shop Scottsdale's attached housing.
Those projects now go through Full Review unless a waiver applies.
| What the lender examines | Limited Review, before Aug. 3, 2026 | Full Review, now |
|---|---|---|
| HOA budget and assessment levels | Generally not collected | Reviewed for adequate assessments and insurance-deductible funding |
| Replacement reserves | Generally not collected | At least 10% of budgeted assessment income today, rising to 15% on Jan. 4, 2027 |
| Reserve study, if used instead | Not required | Must fund the highest recommended allocation, and the baseline method is no longer allowed |
| Owners behind on HOA dues | Not a focus | Generally limited to 15% of units 60 or more days delinquent |
| Minutes, financials, engineer reports | Generally not collected | Possible evidence on critical repairs, deferred maintenance and special assessments |
The scale of the change is significant. A September 17, 2026 column in HousingWire cited feedback from members of the Community Home Lenders of America estimating that 60% to 80% of condo originations had used Limited Review when it was available. The same column described higher borrowing costs, fewer participating lenders and longer closing timelines a month into the change. Those observations are national and come from a trade group's members. No one has yet measured the effect in Arizona.
The Month Scottsdale's Two Markets Split
The August 2026 local market update for Scottsdale, published through Phoenix Realtors and ShowingTime, shows the city's detached and attached housing moving in opposite directions.
In August 2026, single-family inventory fell 10% from August 2025 to 1,156 homes, and months of supply dropped from 3.9 to 3.2. Over the same period, townhouse and condo inventory rose 6.4% to 896 units. Months of supply climbed from 4.6 to 5.1, and days on market until sale rose from 98 to 111. The attached-home median fell 2.2% to $440,000, while the average rose 6.4% to $617,392. New attached listings increased 9.2% while pending sales fell 31.2%.
August was also the first month of the new review rules. These numbers do not prove the rule caused the softening. Single-family pending sales in Scottsdale fell 36.6% in the same month, so other forces were clearly at work. The opposite moves in the attached median and average also suggest a shift in which units sold, rather than a uniform drop in values. What the data does show is that Scottsdale's condo market was already carrying more supply and slower sales when lenders started asking for more paperwork. September figures for the Scottsdale condo segment were not yet public as of early October.
The longer Valley-wide trend points in the same direction. A Mesa Tribune report quoting the Cromford Report said Greater Phoenix condo and townhome sales hit their lowest total since 2009. The report attributed the decline to harder financing, higher insurance costs for attached properties, HOA costs rising faster than inflation, and buyers wanting more privacy and space.
Why The Association's Folder Now Carries The Sale
The new rules shift the focus to the association's finances. Fannie Mae's March 18, 2026 lender letter explained why. Its 2023 repair standards turned up a correlation between underfunded condo reserves and projects needing critical repairs, and unit owners in those buildings can face unexpected special assessments or higher dues. The same letter acknowledged that rising premiums and limited insurance availability are creating problems for borrowers and associations in some areas.
An Arizona association with thin reserves has few options. An April 2026 AZ Big Media analysis of Arizona HOAs laid them out: drain reserves, take out a loan, or levy a special assessment. Under Full Review, each of those choices shows up in the documents the lender requests. A Phoenix HOA law firm warned in July 2026 that communities failing agency standards could lose access to conventional financing, which would hurt marketability and possibly values.
Some of the March changes went the other way. Fannie Mae dropped its 50% limit on investor-owned units in established projects reviewed under Full Review. Freddie Mac dropped its matching owner-occupancy test for established projects. In a city where many complexes have a large share of seasonal and rental owners, that change removes an old reason for rejection while the financial review gets stricter.
The Second Date On The Calendar
The rules arrive in three stages, and the last one has not taken effect yet.
- March 18, 2026. Fannie Mae and Freddie Mac announce the changes. Fannie expands its Waiver of Project Review to projects with ten or fewer units, effective immediately.
- August 3, 2026. Limited Review and Streamlined Review end. Reserve studies using the baseline funding method, which lets the reserve balance approach zero without falling below it, no longer qualify.
- January 4, 2027. The minimum replacement reserve under Full Review rises from 10% to 15% of annual budgeted assessment income at both agencies.
The third date matters most for anyone listing this fall. A Scottsdale condo that goes under contract in November could close after January 4, depending on when the buyer applies. An association that clears the 10% minimum but budgets less than 15% may pass review today and fail it a few weeks later. In June, the National Association of Mortgage Brokers warned regulators that Full Review could bring longer closings, deals falling apart, and pressure on associations to raise dues or levy special assessments. Those were predictions, not measured outcomes.
If You Are Selling A Scottsdale Condo Or Townhome This Fall
Sellers used to deal with the HOA documents during escrow. They now belong in pricing and preparation, before the unit goes on the market. Questions to work through with your agent, your association's management company and the buyer's lender:
- Request the current budget and reserve study now. Check whether the replacement reserve line meets 10% of assessment income, and whether it would meet the 15% minimum that takes effect January 4, 2027.
- Ask whether the reserve study uses the baseline method. If it does, it can no longer be used to show reserves are adequate.
- Ask the manager about delinquencies. Freddie Mac's established-project standard generally caps owners 60 or more days behind on dues at 15% of units.
- Collect recent minutes and any engineer reports. Lenders may use these records to check for critical repairs, deferred maintenance or pending special assessments.
- Confirm the master insurance policy. Insurance compliance is a basic eligibility requirement for the project.
Knowing the answers before you list lets you set a price that reflects which buyers can actually finance your unit. In August 2026, Scottsdale condos that sold took an average of 111 days to reach a sale. A buyer whose loan stalls on the building's paperwork can add weeks to that.
If You Are Buying
Ask your lender to check the project's eligibility before you write an offer, not after the inspection. Small buildings may avoid Full Review entirely. Fannie Mae's expanded waiver covers new and established projects with ten or fewer units, although projects with five to ten units generally cannot be part of a master association or larger development.
If a complex you like does not qualify, financing may still be possible. In September 2026, UWM announced broader financing for non-warrantable condos along with an eligibility tool. Its CEO said losing the shortened review process could shrink the buyer pool and slow closings. Terms on these loans vary by lender and borrower, so compare them carefully with a loan officer.
A Few Questions We Hear Often
Does this affect single-family homes in Scottsdale? These project standards apply to condo projects. Detached homes are not reviewed this way, although Fannie Mae's March letter also changed some property insurance requirements for one-to-four-unit homes.
Does a new Old Town condo building face the same review? New and newly converted projects follow their own Full Review requirements. That includes a rule that at least 50% of units must be sold or under contract to primary-residence or second-home buyers.
Is a condo questionnaire always required? Freddie Mac's condo FAQ calls the GSE Condo Questionnaire and its addendum optional forms, and many lenders use their own forms or other documents instead. If a lender's questionnaire doesn't answer what the lender needs to know, the lender has to get more information before it can decide whether the project is eligible.
If you own a condo or townhome in Scottsdale and are thinking about listing before or after January 4, 2027, Kapanicas Group can go through your association's budget, reserve study and insurance with you and help you set a price based on which buyers can finance your unit. Schedule a Free Market Consultation, and bring your HOA documents.
