Myrtle Beach Condo Financing Just Changed: What Fannie Mae’s New Rules Mean for Your Loan

If you have been shopping for a condo along the Grand Strand this year, there is a rule change you need to know about — and most buyers, plenty of agents, and a surprising number of lenders still have not caught up to it.

On August 3, Fannie Mae retired the Limited Review process for established condo projects. If that phrase means nothing to you, no problem. Here is the part that matters: the shortcut that used to get a large share of condo loans approved without anyone digging into the building’s finances is gone. Established projects now get the full examination, every time.

I want to walk you through what actually changed, what is coming in January, and why our market feels this more than almost any market in the country.

What changed on August 3, 2026

Condo loans have always involved two separate approvals. One is you — your credit, income, assets, and down payment. The other is the building itself. A building that meets Fannie Mae’s standards is called “warrantable,” and warrantable buildings qualify for conventional financing. Buildings that fail do not.

Under the old Limited Review process, a buyer putting enough money down could skip most of the building-level questions. Your file got scrutinized. The HOA’s books largely did not.

Fannie Mae’s Lender Letter LL-2026-03 ended that. For loan applications dated August 3, 2026 or later, established projects that would have qualified for Limited Review must go through Full Review instead. Freddie Mac made a parallel change to its own Streamlined Review process, so switching investors does not get you around it.

Full Review means the lender collects and reads the HOA budget, the reserve study, the master insurance policy, the delinquency report, and the answers to a long project questionnaire. In practical terms, that adds documentation, adds time, and adds more opportunities for a building to disqualify itself.

There is one piece of genuinely good news in the same letter. Fannie Mae expanded its Waiver of Project Review to cover new and established projects with ten or fewer units, effective immediately. Small buildings got easier. Larger ones got harder.

What is coming on January 4, 2027

The second change has a later date on it, and it is the one I would be paying attention to if I owned a condo here.

Today, a building under Full Review needs its annual budget to allocate at least 10% of assessment income to reserves. Starting with applications dated January 4, 2027, that minimum rises to 15%.

Related, and already in effect as of August 3: when an association has a reserve study, lenders must verify the budget funds the highest recommended allocation in that study. The baseline funding method is no longer permitted, and the study needs to have been completed within the last 36 months.

Put plainly — a building funding reserves at 11% of assessments passes today and fails in January unless the board amends the budget or raises dues. Boards have a few months to get in front of this. Owners have a few months to ask whether their board is doing it.

Why the Grand Strand feels this more than most markets

Nationally, condos are a slice of the housing market. Here, they are a huge share of what trades — oceanfront towers in Myrtle Beach and North Myrtle Beach, golf villas around Carolina Forest and Murrells Inlet, low-rises in Surfside and Garden City, resort product up and down the Strand.

And a lot of those buildings share characteristics that Full Review looks at closely:

• Heavy rental and investor ownership, which is normal in a beach market and unusual to an underwriter
• Master insurance policies carrying large wind and hail deductibles — note that as of July 1, 2026, the maximum allowable per-unit deductible on a master policy is $50,000
• Reserve funding deliberately kept lean so monthly dues stay attractive to buyers
• Ongoing balcony, roof, stucco, and structural work — the price of decades of salt air and storm exposure

None of those are automatically disqualifying. But under Full Review, all of them get examined instead of waved through.

The things that can disqualify an entire building

These are project-level tests. They have nothing to do with how strong a borrower you are:

1. Reserves. At least 10% of budgeted assessment income today, rising to 15% for applications dated January 4, 2027 or later.
2. Delinquencies. Too many owners behind on dues, and the whole project fails. The standard threshold is 15% of units 60 or more days past due.
3. Litigation. Active suits against the HOA involving structural defects, life-safety issues, or claims that exceed insurance coverage.
4. Insurance. Inadequate master coverage, or a per-unit deductible above the $50,000 cap.
5. Commercial space. Non-residential square footage above the allowable share of the project — relevant for mixed-use oceanfront buildings with retail or restaurant space on the ground floor.
6. Deferred maintenance and special assessments. Outstanding structural or safety repairs, especially anything balcony-related, can pause a project until the work is funded and complete.

I want to be direct about the implication, because it surprises people: a 780 credit score and 30% down will not fix a building that fails these tests. When a project is non-warrantable, it is non-warrantable for every conventional buyer in it.

If you are already under contract

The date that governs is your loan application date, not your contract date and not your closing date.

If you are under contract right now, here is what I would ask your lender this week — not at day 25 of a 30-day close:

• Has the HOA questionnaire been ordered yet, and when did you order it?
• When was the reserve study completed, and is it inside the 36-month window?
• What percentage of budgeted assessment income does the budget allocate to reserves?
• What is the per-unit deductible on the master policy?
• Is there any pending litigation or active special assessment?

HOA management companies are slower than everyone would like, and the questionnaire is now on the critical path for your closing. Ordering it late is the single most common reason condo closings slip.

What to do if the building does not pass

A non-warrantable finding is not the end of the deal. It changes which door you walk through:

• Portfolio financing. Lenders who keep the loan rather than sell it to Fannie or Freddie set their own project rules. Expect a larger down payment and a somewhat higher rate.
• DSCR financing. If you are buying for rental income, a debt-service-coverage loan qualifies the property on its own cash flow and is generally more flexible on project standards.
• Second-home and investment programs. Purpose-built for exactly this market, and often the right fit for a coastal second home.
• Cash, then refinance later — but only if there is a credible plan for the building to become warrantable.
• Walk away. Sometimes this is the right call, and I will tell you so.

That last one deserves a moment. If a building cannot get conventional financing, every future buyer faces the same wall you did. That shrinks the resale pool and puts pressure on values. A non-warrantable building is not only a financing problem — it can be a value problem. Go in with your eyes open, or do not go in.

The one thing I would do this week

Before you write an offer on a Grand Strand condo, send me the building name and address. I will check it against current project standards and tell you what financing it will support — usually within a business day, at no cost and with no obligation.

It takes a day. Finding out at day 25 of a 30-day close takes your deposit, your closing date, and quite a bit of your patience.

While you are waiting on that answer, run the unit through our mortgage calculator — and do not leave the HOA dues field blank. On the Grand Strand it is often the line that decides whether a payment works.

If you are an agent with condo listings, the same offer applies, and I would rather look at your inventory before it goes under contract than after.

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Travis Buis, NMLS #1711446. Elite Home Lending, LLC — NMLS #2788023. Equal Housing Opportunity.

This article is for educational purposes only and is not a commitment to lend or an offer of credit. Project eligibility standards are set by Fannie Mae, Freddie Mac, and individual investors and are subject to change; the requirements described here are drawn from Fannie Mae Lender Letter LL-2026-03. Every condominium project is evaluated individually, and eligibility can change as an association’s finances change. Loan approval is subject to underwriting, credit approval, and property eligibility. Calculator results are estimates only and do not constitute a loan offer or a guarantee of terms.