Beginning January 4, 2027, Fannie Mae will increase its minimum replacement-reserve allocation from 10% to 15% of an association's annual budgeted assessment income for projects reviewed through its Full Review process.
This isn't an Illinois law requiring every condo association to maintain 15% reserves. Rather, it is a mortgage-lending standard that can affect whether a condominium project qualifies for conventional financing.
With the 2027 changes approaching, fall is a good time for boards to review their financial plans.
- Review your reserve contribution: Look at what percentage of assessment income currently goes toward replacement reserves. If your association is below 15%, discuss what increasing contributions could mean for the budget.
- Review your reserve study: Identify major projects expected over the next several years and compare projected costs with current savings. If your reserve study is outdated, consider having it updated.
- Identify potential funding gaps: Don't look only at the current reserve balance. Consider whether the association will have enough money when major projects actually occur.
- Communicate with owners: Reserve increases aren't always easy conversations, but proactive planning is generally better than an unexpected special assessment after a major repair becomes urgent.
The upcoming lending changes are a reminder that the financial health of a condominium building matters.
Chicago condo boards should use the months ahead to review reserves, upcoming capital projects, assessments and association policies. If your board would like to ensure they are in financial harmony, remain compliant with state law and your governing documents, and operate transparently; Haus Financial Services can help your board review reserves, upcoming capital needs, and funding strategies.
The goal isn't simply to meet a lending standard. It's to make sure your building is financially prepared for the repairs and expenses that are coming.