If you own a condo in Chicago, or you're thinking about buying or selling one, a few rule changes are about to matter. Some come from Fannie Mae and Freddie Mac, which set the standards for most conventional condo loans. Here's what's already in place, what starts in January, and what you can stop worrying about.
Already in Effect: Lenders Are Looking Closer at the Building
When you finance a condo, the lender reviews the building as well as the buyer. That review got more thorough this year.
Since August 3, 2026, the quicker "limited review" option is gone for most established buildings. Any building with more than 10 units now gets a full review of its budget, reserves, delinquencies and overall financial health. Smaller buildings with 10 or fewer units got good news: many of them can now skip the project review altogether.
Insurance rules shifted too. Since July 1, the master policy's deductible can't exceed $50,000 per unit, and a buyer's HO-6 policy needs to be set up to cover that gap. On the plus side, Fannie Mae dropped its 50% cap on investor-owned units, which opens the door for some buildings with a lot of renters.
January 1, 2027: Two New Illinois Laws
Associations need a written collection policy. Starting January 1, every Illinois condo association, no matter its size, must adopt a written policy for collecting unpaid assessments before it can take an owner to court. The policy has to spell out due dates, late fees, payment plan options and when an account goes to an attorney. For sellers, that policy will now be part of the resale disclosure packet your association provides.
More transparency from boards. A second new law requires associations to email the annual financial report to owners who have opted in to electronic delivery. By January 1, 2028, every association will also need a website with meeting information and approved board minutes.
January 4, 2027: The Reserve Rule That Could Move Your Assessments
This is the big one. For loan applications dated January 4, 2027 or later, Fannie Mae and Freddie Mac will expect a building to put at least 15% of its annual budget into reserves, up from 10%.
There is one alternative. A building can qualify with a lower percentage if it has a reserve study completed or updated within the last three years and funds reserves at the highest level that study recommends.
Why it matters: if a building falls short, buyers may not be able to get a conventional loan there. That can shrink the pool of buyers and affect value. Some boards may raise monthly assessments or shift money into reserves to stay on the right side of the line. Mortgage industry groups asked for a delay this summer, but as of early November, the January date still stands.
What Didn't Change
You may have heard that Illinois would require every condo building to do a reserve study every five years. That bill passed the state Senate, but it stalled in the House and is not law. Several other proposals, including a state registry for associations, also failed this session. Illinois law still requires associations to budget for reasonable reserves, as it has for years.
What This Means for You
If you're buying, ask early about the building's reserve percentage, its most recent reserve study, and the master policy deductible. Your lender will be looking at all three.
If you're selling, find out where your building stands before you list. A building that meets the new standards is easier to finance, and that's a selling point worth highlighting.
If you're an owner, keep an eye on your 2027 budget. If your assessment goes up, the reserve rule may be the reason.
Have questions about your building or a condo you're considering? Reach out anytime. We're happy to help you sort through the documents and what they mean for your move.
This post is for general information and isn't legal or lending advice. Check with your attorney or lender about your specific situation.
