Freddie Mac Condo Approval: Eligibility, Reviews, and 2026 Updates

Condo financing through Freddie Mac has its own set of project eligibility rules that differ from Fannie Mae in meaningful ways. Brokers who work both agencies need to understand where the guidelines diverge, particularly around review types, ineligible project characteristics, and the reciprocal review process. This guide covers the key rules from the Freddie Mac Single-Family Seller/Servicer Guide, Chapter 5701, including recent changes announced in Guide Bulletin 2026-3 (March 2026).

How does Freddie Mac condo eligibility differ from Fannie Mae?

Both agencies require project-level review for condo loans, but the criteria and processes are distinct:

• Review types. Freddie Mac's primary review types are Established Project (Section 5701.5), New Project (Section 5701.6), Reciprocal (Section 5701.9), and Exempt from Review (Section 5701.7). Fannie Mae uses Full, Limited, and Project Eligibility Review Service (PERS). The documentation thresholds and eligibility cutoffs differ between agencies.
• Owner-occupancy. As of Guide Bulletin 2026-3 (March 2026), Freddie Mac has retired the 50% owner-occupancy requirement for established projects used for investment properties (Section 5701.5(b)). This is a significant recent change; always verify current requirements.
• Ineligible project lists. The specific characteristics that disqualify a project differ between agencies. A project eligible under one agency may not qualify under the other.

If you are comparing Fannie Mae requirements side by side, see our Fannie Mae gift fund requirements post for an example of how Fannie Mae structures its Selling Guide rules.

What are the current project review types?

Freddie Mac offers several project review options. Note: the Streamlined Review type is being retired effective for applications received on or after August 3, 2026 (Guide Bulletin 2026-3). Going forward, established projects must use the Established Project review or Reciprocal Review.

Established Condominium Project review (Section 5701.5) is the primary review for existing projects. It covers:

• Budget analysis: adequate reserves, no special assessments that signal financial instability
• Insurance verification: master policy coverage meets Guide Chapter 4703 requirements
• Litigation review: any pending or active litigation must be assessed for project viability
• Critical repairs assessment per Sections 5701.3(n) and 5701.3(o)

New Condominium Project review (Section 5701.6) applies to projects that do not meet the definition of an established project, including those still under construction or recently converted.

Exempt from Review (Section 5701.7) has been expanded to cover new and established projects with 2 to 10 units, provided they meet specific criteria including the general eligibility requirements in Section 5701.2(b) and are not ineligible under Section 5701.3.

Reciprocal Project Review (Section 5701.9) allows Freddie Mac to accept projects with an "Approved by Fannie Mae" status in Fannie Mae's Condo Project Manager or FHA-approved projects, subject to additional requirements.

What makes a condo project ineligible?

Guide Section 5701.3 lists project characteristics that render a condo ineligible for Freddie Mac financing:

• Active litigation that could affect the financial viability or safety of the project (minor litigation exceptions exist if the seller documents compliance)
• Excessive commercial space exceeding 35% of the total above- and below-grade square footage (commercial parking excluded from the calculation)
• Single-entity concentration where one entity owns more than the allowable number of units: more than 2 units in projects with 5-20 total units, or more than 25% of units in projects with 21 or more units. A purchase exception exists if the transaction reduces concentration, the entity owns no more than 49%, and units are actively marketed for sale.
• Condo hotel or transient housing where the project functions as hotel or resort-style rentals (Airbnb-heavy projects frequently fail this test)
• Critical repairs where the project needs unfunded repairs costing more than $10,000 per unit, or has an active evacuation order
• Insolvency proceedings where the project is terminating or subject to insolvency action

Check these characteristics before ordering the appraisal. Discovering an ineligible project after the appraisal is ordered wastes time and money.

How do reciprocal reviews work?

Guide Section 5701.9 allows Freddie Mac to accept condo project approvals from other agencies, reducing duplicative review work:

• Fannie Mae-approved projects. If a project has an "Approved by Fannie Mae" status designation in Fannie Mae's Condo Project Manager (CPM), Freddie Mac may accept that review, subject to its own LTV limits and general eligibility requirements.
• FHA-approved projects. Projects on HUD's approved condo list may also qualify under reciprocal review.

Reciprocal reviews can simplify delivery when a project is already approved by another agency. However, the project must still meet Freddie Mac's general eligibility requirements in Section 5701.2(b) and must not be ineligible under Section 5701.3.

For projects with borderline eligibility that do not qualify under any standard review type, contact your Freddie Mac account representative. Freddie Mac reserves the right to conduct its own review per Section 5701.2(c), and account teams can provide guidance on specific project situations.

What should brokers do before submitting a condo file?

1. Run the project through both Fannie Mae and Freddie Mac eligibility criteria to determine the best delivery option
2. Order the condo questionnaire early; HOA management companies can take weeks to respond
3. Review the HOA budget and reserve study for red flags (special assessments, underfunded reserves, high delinquency rates)
4. Check litigation status before investing in an appraisal
5. If the project has borderline eligibility, contact your Freddie Mac account representative before committing the file. Check whether a reciprocal review (Section 5701.9) or Exempt from Review (Section 5701.7) applies.

For more agency guideline breakdowns, see the Agency Guidelines series. For general file preparation, see our file readiness checklist.

This article is for informational purposes only and is not professional advice. Always verify against current guidelines before making decisions.