New Fannie Mae and Freddie Mac loan requirements: A guide for Minnesota associations

What is Fannie Mae?

Fannie Mae is a government-sponsored enterprise (GSE) that buys mortgages from lenders and sets guidelines for loans that qualify as “conforming.” It does not lend money directly to buyers, but by purchasing these loans from banks and mortgage companies, it helps keep money available in the housing market. Fannie Mae’s role is especially important for condominium associations and HOA communities in Minnesota because a loan must meet Fannie Mae loan requirements for many buyers to access affordable financing.

This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
 

What is Freddie Mac?

Freddie Mac is also a GSE, created to provide stability in the mortgage market by purchasing loans from smaller banks and credit unions. Like Fannie Mae, Freddie Mac sets standards for loans it will buy, known as Freddie Mac loan requirements. These guidelines impact credit score minimums, down payments, debt-to-income ratios, and property eligibility. For Minnesota condos and co-ops, Freddie Mac often plays a bigger role in supporting buyers who work with local or regional lenders, which makes its standards just as important as Fannie Mae’s.
 

Loan programs

Fannie Mae and Freddie Mac offer several loan programs designed to help different types of buyers. The HomeReady® program from Fannie Mae and the Home Possible® program from Freddie Mac both allow down payments as low as 3%, making them attractive to first-time or moderate-income buyers. Conventional conforming loans, which meet Fannie Mae and Freddie Mac loan requirements, remain the most common path for buyers in Minnesota. These programs typically require a minimum credit score of 620, a debt-to-income ratio of no more than 45–50%, and proof of steady income.

If a community doesn’t meet eligibility standards such as reserve funding requirements or limits on commercial space, buyers may be unable to obtain financing, which can slow sales and reduce property values.
 

Recent changes to Fannie Mae and Freddie Mac lending requirements

Fannie Mae and Freddie Mac have announced several updates to their lending rules that take effect over the next year. Starting September 30, 2025, condo and co-op projects that are terminating or involved in insolvency proceedings will no longer qualify for loans backed by these agencies. Around the same time, new appraisal standards will begin rolling out, changing how property details like square footage and condition are reported.

The Federal Housing Finance Agency (FHFA) has increased AMI limits for 2025, and these changes took effect on May 18, 2025. Most areas saw an increase over the 2024 thresholds, meaning more households now qualify for Fannie Mae and Freddie Mac’s lending programs. As of 2025, lender incentives are no longer capped, making them easier to apply in purchase transactions.

In July 2025, the FHFA announced that lenders will soon be able to use VantageScore 4.0 alongside FICO scores. Because VantageScore counts rent and utility payments, this change could help renters with limited credit history qualify for a mortgage.
 

How they can help

Fannie Mae and Freddie Mac make it easier for buyers to qualify for mortgages by creating clear rules that lenders follow. Their backing gives lenders confidence to offer loans with lower down payments and competitive interest rates. For Minnesota community associations, this stability means a larger pool of qualified buyers for condominium units and townhomes. When loans meet Fannie Mae and Freddie Mac loan requirements, properties are more marketable, helping preserve values across the community.
 

Key loan requirements for buyers

Both Fannie Mae and Freddie Mac loans often come with similar baseline requirements:

• A minimum credit score of 620 for fixed-rate mortgages.
   
• A down payment as low as 3% with specific programs.
   
• Debt-to-income ratios typically capped at 45%, but potentially extendable to 50% with compensating factors.
   
• Proof of stable income and employment, usually covering two years.
   
• Cash reserves of two to six months of mortgage payments in some cases.

While these requirements apply to buyers, community associations in Minnesota are also affected. If too many loans within a building fall outside these standards, lenders may decline to finance new buyers. For this reason, boards should understand how Fannie Mae and Freddie Mac loan requirements intersect with community operations.
 

Association-level requirements

Fannie Mae and Freddie Mac also evaluate the community itself. For Minnesota condos, some of the association-level requirements include:

• Adequate reserve funding to cover long-term repairs and capital improvements.
   
• No more than 15% of units being 60 or more days delinquent on assessments.
   
• Limits on commercial use within the community (generally no more than 35% of total square footage).
   
• Compliance with insurance standards, including adequate liability, fidelity, and hazard coverage.

If a community falls short in these areas, lenders may refuse to underwrite loans, regardless of the buyer’s qualifications. Meeting Fannie Mae and Freddie Mac loan requirements at both the buyer and community level keeps properties marketable and supports stable resale values.
 

Legal considerations for boards

Boards should avoid giving legal advice to residents but can work with their property management company and legal counsel to confirm whether the community meets eligibility standards. For example, Minnesota associations should review bylaws and covenants, reserve funding policies, and association insurance coverage with professional guidance. Keeping practices aligned with Fannie Mae and Freddie Mac loan requirements can reduce the risk of financing issues and disputes.
 

How FirstService Residential can help

Keeping up with Fannie Mae and Freddie Mac loan requirements can feel overwhelming for Minnesota community associations, especially when balancing daily operations with long-term financial planning. That’s where FirstService Residential comes in. Our team helps boards prepare financial statements, track assessment delinquencies, and maintain compliance with insurance standards, all of which affect loan eligibility. We also coordinate with lenders, attorneys, and community auditors to streamline the process when buyers need documentation.

By partnering with FirstService Residential, your community gains the support of a local team with national resources. We help boards understand the intersection of property management and financing so that your community can remain attractive to buyers and financially healthy. Contact a member of our team today to learn more about how we can support your Minnesota association.