When a buyer finances a Cove Communities townhome this fall, who else is approving the purchase? The lender looks at the buyer, as it always has. If the home is legally a condominium unit, which the recorded association documents will show, then for conventional loan applications dated on or after August 3, 2026, the lender also has to look much harder at your homeowners association. That covers its budget, its reserve funding, any assessments it has levied and how its units are used. In Lake Havasu City's condo and townhome segment, the association's paperwork now carries much of the deal.
August 3 removed the short review
Until this summer, lenders could often give an established condo project a lighter check. Fannie Mae called it Limited Review. Freddie Mac called it Streamlined Review. Both have now been retired.
Fannie Mae's Lender Letter LL-2026-03, dated March 18, 2026, says established projects that used to qualify for Limited Review "must now be reviewed using the Full Review process or, when applicable, the Waiver of Project Review process." Lenders had to apply the change to all loan applications dated on or after August 3, 2026. Freddie Mac's Bulletin 2026-C, issued the same day, retires Streamlined Review for applications received on or after August 3, 2026.
The same Fannie Mae letter also tightened the rules on reserve studies. An association that doesn't budget enough for replacement reserves can still use a reserve study to show it is adequately funded. The lender now has to confirm that the budget includes the study's highest recommended reserve amount, though. Fannie Mae no longer lets lenders accept the "baseline funding" method, which lets the reserve balance approach zero without ever going below it.
For a seller, that means the association's financials get a close read on almost every financed offer. Before, many deals got only a quick check.
A stricter review hits harder where homes already sell slowly
A tougher approval process would matter less if condo buyers were plentiful. The Lake Havasu Association of REALTORS® monthly reports show they are not. The August 2026 report, posted October 8, is the newest one available.
| August 2026, Lake Havasu City | Single-family | Condo/townhome |
|---|---|---|
| Closed sales in August | 91 | 8 |
| Closed sales, January through August | 979 | 116 |
| Average sales per month, January through August | about 122 | about 14.5 |
| Active listings at end of August | 604 | 126 |
| Months of supply at the year-to-date pace | about 5 | about 8 to 9 |
The last two rows are simple arithmetic: active listings divided by the average monthly sales pace for 2026 so far. They show that an attached home in Havasu waits in a line almost twice as long as a detached one. When a financed buyer drops out because the project can't pass a full review, the listing goes back to an 8- to 9-month line.
Two warnings about this data. First, 8 sales in one month is far too few for the August condo median of $161,000 to mean much against August 2025's $291,250. A handful of lower-priced units can move that number. The year-to-date condo median, $239,000 in 2026 versus $273,000 in 2025, rests on a larger base. Second, August's low sales count says nothing about the new rule. The rule covers applications dated August 3 or later, so most homes that closed in August were already under contract before it took effect. Its effect shows up in the months ahead.
What a full review reads in your association's file
A full review is where the association's choices turn into the buyer's approval or denial. The agencies' published guidance points to several items.
The reserve line. A lender needs to see the budget funding replacement reserves at the required level. Freddie Mac's condominium mortgage FAQ says a special assessment cannot stand in for the required 10% budget reserve. An association that has been covering big repairs with one-time assessments instead of budgeted reserves can run into trouble here.
Critical repairs. The same Freddie Mac FAQ says projects that need critical repairs stay ineligible until those repairs are done. If a roof replacement or structural project is underway, its completion date can set the earliest date a financed buyer could close.
How units get rented. Fannie Mae lists projects that operate like hotels or manage daily or short-term rentals as ineligible. Freddie Mac's FAQ adds that online short-term rental ads alone don't automatically disqualify a project. Lenders have to look at what role the HOA or a manager plays and whether the units show transient-use features. Owners renting out their own units is a different situation from a project run as a rental operation, and the association's documents are what show which one applies.
FHA loans run on a separate track. In May 2026, HUD made it easier to get a case number for projects listed as Expired or "Rejected - Register SUA." HUD's FHA INFO notice states plainly that a case number is not approval of the unit or the project.
January 4, 2027 raises the bar again
The reserve requirement is about to go up. For Full Review applications dated on or after January 4, 2027, Fannie Mae raises the minimum replacement reserve allocation from 10% to 15% of the annual budgeted assessment income. Freddie Mac's Bulletin 2026-C makes the same change on the same date.
Here's the math with a round number. An association that budgets $100,000 a year in assessment income needs $10,000 going to reserves under today's rule and $15,000 for applications dated after January 4. If you list this winter and your buyer applies on or after January 4, your association's current budget will be measured against the higher number. A seller can ask the association now whether its budget meets 15%, then plan around the answer.
One change works in sellers' favor
Freddie Mac's bulletin also dropped the 50% owner-occupancy test for established condominium projects and for investment-property mortgages. Presale requirements still apply to new projects.
That matters in Havasu. In a Today's News-Herald report on the local market, Lake Havasu Association of REALTORS® president Phil Annett described the city as "a resort and second home community." He estimated that second homes could make up 33% to 40% of local homes. The same article cited a city figure of about 18% as of 2023. Under Freddie Mac's rules, an established project with many seasonal owners no longer hits the occupancy test. The review now centers on budgets, reserves, repairs and rental operations, and the association controls most of those.
The packet to gather before the sign goes up
Some Havasu management companies post their fee schedules publicly. One example is The Coves at Sailing Hawks, which Amy Telnes Management Services lists on its fee page at $90 a month in dues, a $75 transfer fee and a $750 capital improvement fee. The page shows no date, so confirm every figure with the association. These are the charges buyers see at closing. The documents lenders review are a separate stack. Ask for these before you list:
- The current annual budget, with the replacement reserve line shown as a percentage of assessment income.
- The most recent reserve study, if there is one, and whether the budget funds its highest recommended amount.
- Any special assessments, past or planned, and what they pay for.
- The status and expected completion date of any major repair project.
- The CC&Rs and rental rules, plus whether the HOA or a manager runs any rental program.
- Contact details for whoever fills out lender questionnaires, along with their fee and typical turnaround time.
With these in hand, a buyer's lender can start the project review on the first day of escrow.
FAQ
Does this affect cash buyers? The project review rules described here are lender requirements for loans sold to Fannie Mae and Freddie Mac. A buyer paying cash is not getting one of those loans.
Is the condo market in Havasu falling? August's median came from just 8 sales. Using January through August 2026, the condo median was $239,000, compared with $273,000 for the same months of 2025. That comparison has a broader base. The clearer signal is supply: about 8 to 9 months of attached-home inventory at this year's sales pace.
Does the January 2027 change apply to a contract signed in December? Fannie Mae and Freddie Mac tie it to the loan application date, January 4, 2027 or later, not the contract date. Your buyer's lender can confirm how it applies to a specific file.
This post is general information about published lender and agency rules. It is not legal, financial or lending advice, so please confirm your own situation with your lender, your association and the right professionals.
If you own a condo, or a townhome in a condominium project, in the Cove Communities and want to know how your association's budget will hold up under a buyer's full review before you list, REALTOR® DJ can help you gather the HOA packet and plan a timeline around the January change. Schedule a free consultation.
