What the lender checks
- Property coverage on the building at replacement cost, not a discounted figure.
- The deductible, expressed per unit, within the agency cap.
- Flood insurance where the building is in a special flood hazard area.
- Windstorm coverage in coastal markets where it is written separately.
- Liability and, for larger associations, fidelity coverage.
Why deductibles became a problem
As coastal property insurance grew more expensive, many associations kept premiums in check by raising deductibles — sometimes to a percentage of the building's insured value, which can work out to a very large amount per unit. That shifts risk onto owners, and the agencies responded with a hard cap. A building whose deductible exceeds it fails review even if everything else is in order.
Your HO-6 policy is separate
Your own unit-owner policy covers your interior and belongings and, often, loss assessments — your share of a deductible or an uninsured loss the association passes on to owners. Lenders require it on many condo loans, and in buildings with high master deductibles its loss-assessment limit deserves attention.
Insurance problems are often temporary
Unlike a structural repair, an insurance shortfall can be fixed at the association's next renewal by adjusting coverage or the deductible. If a building failed on insurance, it is worth asking when the policy renews and what the board plans to change. In the meantime, a portfolio lender may finance the unit if its own insurance requirements are met.
Sources, checked September 2026: Fannie Mae Lender Letter LL-2026-03 (March 18, 2026) · Newsweek, April 2025 (Allcock Marcus analysis) · Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects. Agency guides change; a lender confirms the rules in force on your application date.
Common questions
What is the maximum condo master policy deductible for a Fannie Mae loan?
$50,000 per unit, under the changes Fannie Mae announced in March 2026.
Why does condo insurance affect my mortgage?
Because the building is the lender's collateral. Inadequate coverage or a large deductible increases the risk the lender and owners carry.
Can a building fix an insurance problem?
Often, at renewal, by adjusting coverage or the deductible. Ask when the policy renews.
Do I still need my own condo insurance?
Usually, yes. An HO-6 policy covers your unit's interior and, often, loss assessments passed on by the association.