Steps To A DC Home Purchase

Section: Buyer Playbook

Author: Susan Isaacs, Washington DC Real Estate Strategist

Where to begin

Ready to purchase a home in Washington DC but don’t know where to start? Here’s our ‘best practices’ list to set you on the right path to home ownership.

Prioritized Steps

Research your local market. Interview reputable mortgage lenders and obtain a pre-approval. Select an experienced, skilled buyer’s agent to help you structure your home search in a way that promotes efficiency, a smooth process and satisfaction with its outcome.

Do I Need A Mortgage Loan?

• If you are not paying cash for a home, you’ll need a mortgage loan. Seller financing is rare and comes with a list of risks to the buyer. The same is true of rent-to-own agreements.

What Is A Mortgage Pre-Approval?

• A mortgage pre-approval is a statement lenders provide asserting your eligibility for a mortgage loan. Pre-approvals are based on your mortgage application and verified income, credit score, debts, and employment history. The pre-approval letter should include: the lender’s name and contact information, your maximum loan amount, estimated interest rate, loan term and an expiration date.

How Does A Pre-Approval Differ From A Pre-Qualification?

• A pre-qualification is a quick, informal estimate based on self-reported numbers, while a pre-approval requires verified documentation and a hard credit check. Nearly all sellers are advised by their agents to require a mortgage loan pre-approval to be submitted with an offer as it provides much more value than a pre-qualification.

Why Does The Process Begin With Financing?

Before meeting with agents and signing an agency agreement, you’ll want to be sure of your ability to purchase, verify your price point, and confirm your need for concessions, if any. Obtaining a pre-approval and accompanying worksheet ensures you and prospective agents that you understand the cost of borrowing, broker compensation, and your borrowing limits.

• A pre-approval shows prospective agents you’re serious about your intent to purchase and have the ability to assume responsibility for broker compensation

• A pre-approval helps your agent define criteria for timeline, feeds and showings

• Your Pre-Approval should come with a worksheet that helps you estimate transaction costs accurately

• If you find the right property quickly, you’ll have the letter needed to write an offer.

Why Consult Three Lenders?

DC home buyers should contact several lenders for mortgage pre-approvals and worksheets. Request worksheets for the home type(s) you plan to purchase, at the mid-range and the very top of your price point. This will allow you a working estimate for your desired price point, and a ‘worst case scenario.’ It is easier to recalculate downward than upward. Lenders are not always available to generate new worksheets or pre-approvals when offers are being drafted. This way, you’ll have the tools to do the math yourself.

You’ll want pre-approvals from a local, reputable and recognizable lenders. Remember, the pre-approval’s purpose is to provide reassurance. A document from a lender outside your geographical area that none of the parties have heard of does not accomplish that.

Ask lenders to review DC homebuyer programs that may benefit you. You may also qualify for down payment assistance, home buyer tax credits or DC tax abatement.

Don’t make a lender commitment until you’ve contracted on a home. DC condos, new construction, co-ops, and single family properties all qualify differently. Your price point also makes a difference. Lenders offer a variety of programs. You’ll want to match your loan to the property you want to purchase. Having the pre-approval(s) and worksheets in hand speeds up the comparison process and allows for rapid decision-making when an offer is accepted and goes to contract.

12 Questions To Ask Lenders

1, What loan options are available to me, including local home buyer programs?

2. What is the maximum purchase price I qualify for? Which loan category does this loan fall into (jumbo or conforming conventional, or other loan type)?

3. What is the current interest rate and associated costs for this type of loan?

4. What will my monthly mortgage payment be at the maximum approved price, and what loan fees apply?

5. Can you provide me with a cost estimate worksheet similar to a Closing Disclosure, detailing all the costs of a transaction at this price?

6. How do my options change if my downpayment is increased or decreased?

7. When is a rate lock available, what is the duration, and do you offer a free ‘float down’ during the loan term? What is your fee for a rate lock?

8. Are there any restrictions for down payment gifts or source of funds?

10. Will my loan be sold after closing?

11. Does this loan have a prepayment penalty?

12. Is this loan assumable?

What You’ll Need To Provide

• Sufficient information to complete a loan application

• Credit review. Your lender will run your credit reports.

• Provide copies of your W2s, tax returns for two years, three months of recent bank statements, and any other information requested by lenders.

• Discuss loan options with your loan officer and make sure to request a worksheet showing all costs of your transaction. Ask the lender to calculate based on your highest approvable amount. This saves time when you’re ready to make offers. It is a common misconception that submitting an offer with a pre-approval amount higher than the offer amount will weaken your negotiation power. Price is negotiated on the merits of the property and market values, not the buyer’s purchasing power.

Partnering With An Agent

The biggest transaction of a lifetime is no time to wing it. Now more than ever, it’s important to have an experienced pro to guide you from search, negotiation and transaction management to closing and beyond. Interview experienced agents to find the professional best-suited to your needs. You’ll be asked to review and sign an agency agreement before any work commences on your behalf.

Quality Representation

New market, new rules, new economic climate. A skilled agent can acquaint you with the latest changes to real estate practices, provide expert market knowledge, property valuation tools and information, navigate complex negotiations, offer access to exclusive off-market listings, help you identify potential property issues, and ultimately save you time and money by guiding you through the often intricate home buying process, especially in a unique market like Washington DC.

Benefits Of Working With A Buyer Agent

• Market Expertise: Agents have deep understanding of local market trends, pricing, and current conditions, helping buyers make informed decisions based on accurate data. This is especially important in a market with fluctuating rates and diverse options

• Negotiation Skills: Agents can effectively negotiate on your behalf, securing the price and terms that work for you while ensuring you don’t lose your desired property to another buyer.

• Access to Off-Market Listings: Agents may have access to off-market properties that don’t appear on search engines, providing you with an expanded array of options.

• Technology: Digital tools, AI and data play significant roles in real estate, and a skilled agent can leverage them to enhance your search, property valuation and transaction.

• In a competitive market, your agent can provide effective strategies and help structure strong offers persuasive to sellers. In a fluctuating market, a skilled agent is invaluable in helping you decode market conditions, identify opportunities, and access off-market properties.

• Property Evaluation: An experienced agent can spot potential issues with a property that might not be obvious to a buyer.

• Streamlined Process: Agents manage forms, contracts and other paperwork that may be unfamiliar to buyers. In addition, your agent can guide you through contingencies, inspections, rescission periods, and appraisals, freeing up your time and minimizing stress.

Questions To Ask

• How are DC real estate market conditions right now?

• Why is a written agreement required for us to tour homes?

• What are my buyer broker compensation options?

• Does your brokerage charge an ‘admin’ fee? How much is it? Is it negotiable?

• How do you manage offers when cooperative compensation is not provided?

• What if I can’t afford to pay my broker and still cover closing costs and downpayment?

• Review the buyer agency forms

• Does a seller concession for buyer broker compensation count against Fannie Mae or Freddie Mac caps?

• Can I pay my own broker and still use a VA loan?

• What tools do you use for the home search process?

• How much time should I expect my home search to take?

• How will I know if my goals are realistic and achievable?

• Will I be able to view off-market listings?

• Do you handle my full transaction personally, or will I be working with someone else most of the time?

• What’s your communication style and what communication tools do you use?

• How many years have you practiced real estate in Washington DC?

• Please explain how appraisals can affect my transaction

• What do I need to know about home inspection contingencies in the current market?

What You May Be Asked

• Do you have a pre-approval letter issued within the past 30 days? Who’s your lender? (You’ll be asked to provide a copy of the pre-approval letter)

• Are you working now, or planning to work, with other agents?

• Have you toured homes or consulted with other agents? If so, can you furnish a copy of your agreement(s)?

• What type of financing will you use, or are you paying cash?

• Do you have any credit, tax or other issues that may affect your ability to obtain a mortgage loan?

• Do you have available funds for an Earnest Money Deposit, closing costs and broker compensation?

• Do you understand new buyer/broker compensation rules and practices, and how they affect you?

• How much will your downpayment be?

• What are your expectations for your home search?

• Do you have any concerns about working with a buyer’s agent?

• Do you understand what buyer’s agents do, don’t do, and how they benefit your search?

• What are your desired locations, “must-haves” & “wish list?”

• What are your needs regarding pets, parking and Metro proximity?

• What’s your purchase and move-in timeline?

• What else is important to you?

Buyer Agency

Interviewing and hiring an agent should accomplished before reviewing listings and touring homes. In fact, new rules require it. Read about buyer agency and how it affects you.

Strategy And Search

Review your wish list, timeline, price point and other important factors with your agent. Discuss market conditions and how they align with your goals. Your agent should provide various strategies to help you accomplish your goals, and explain the pros and cons of each. Reach compromises where necessary.

Identify the search targets your agent will incorporate in your search feeds. If you’re working with a Compass agent, you’ll receive invitations to private Collections of listings that match your search criteria. All the latest listings will generate automatically, and you’ll get updates in your Inbox as often as you choose. You will also be able to view off-market opportunities throughout the Compass network.

You and your agent will discuss the merits of each listing of interest amd you’ll create a shortlist of favorites. Once you’ve identified the homes you’d like to tour, prioritize them and your agent will set up a tour.

Your agent will make inquires on your behalf about buyer broker compensation, create and review a comparative market value analysis (CMA) for properties toured, and outline an offer strategy when you’ve decided on a home. Strategy for offers differs with each property.

Offer And Contract

Once you’ve discussed terms, your agent will draft your offer and attach all necessary disclosures, then send it to you for signature. Once signed, the offer will be ‘packaged’ and submitted to the listing agent.

A ratified offer exists when all terms are agreed upon in writing. During the contract phase, you’ll exercise your contingencies, if any, perform your due diligence and review any additional documentation required or provided. There may be some additional negotiation involved, for contingencies such as inspection and appraisal. Once all contingencies are satisfied, you’re on your way to settlement.

Settlement And Post-Closing

Your title company will facilitate settlement, during which you’ll sign financial and legal documents, including the Closing Disclosure, promissory note, and mortgage or deed of trust if you’re financing. At the end, you’ll be handed the keys to your new home.

Post-settlement, your agent may check in to make sure your move went smoothly and all is as expected with your home. Many clients appreciate having access to a contractor and vendor list for improvements and repairs.

Rules Of Thumb

Earnest Money

Earnest Money Deposits typically range from 3% to 20%, depending on the situation and price point. The lower end of 3% commonly represents an amount equal to a special mortgage program, or relates to a low-priced property. EMD at the higher end commonly relates to sums for cash transactions, high-value purchases and/or deposits relating to multiple offer scenarios. EMD is presented with your offer in the form of a photo of a check, and credited toward your downpayment if the contract goes to settlement.

Note:

• EMD will be lost if you default on your contract.

• EMD is held by the title company and deposited when a contract is ratified

• EMD percentage affects the strength of your offer.

Down-Payments

Down Payment amounts vary. In the DC Metro area, down payments typically range from as low as 0% down for qualifying VA borrowers, to 3.5% for FHA loans, 3% to 5% for specialized mortgage loan programs, 10% to 20% for co-ops, and conventional loan programs from 5% to 25%. In a multiple offer situation, down payment percentage affects the strength of your offer.

Note:

• Downpayment amount can affect the strength of your offer

• If in doubt of your down payment %, err on the conservative side. You can always increase downpayment, but reducing can trigger contract issues

• Consult with a mortgage professional to determine your downpayment options. Always consult with a mortgage professional to determine your downpayment options.

Closing Cost Budget

In addition to down payment, you’ll pay for transaction closing costs, which can be estimated at approximately 3% to 3.5% of the purchase price of the home, plus broker compensation. Transaction costs vary based on loan product, type of home, and purchase price. Ask lenders for one or more worksheets detailing costs to make apples-to-apples comparisons. Provide your lender with basic worksheet information such as top price (worst case scenario), condo fee if applicable, tax zip code and loan type.

Related Links

Buyer Agency

Agents And Agreements

Why A Good Agent Matters

Paying Broker Compensation

Before You Go

There’s no paywall here.

If you find this article helpful, that’s exactly why I write it.

If you’re planning to buy, sell, or invest in Washington, DC or Northern Virginia this year, the best way to support this publication is to work with me.

I don’t sell leads or charge subscriptions. My business is representing clients, and every article here is written to help consumers make better real estate decisions.

If you’d like to discuss your goals, your timing, or the current market, I’d be happy to schedule a no-obligation representation consultation.

Contact Susan Isaacs to start the conversation.

Buyer Agency In Washington DC

Section: Buyer Playbook

Author: Susan Isaacs, Washington DC Real Estate Strategist

Rules For Buyer Representation

The rules related to engaging an agent have changed for buyers and brokers. Outlined on this page are revised NAR and Greater Capital Area Association of Realtors and MLS rules, and how they affect buyers and broker compensation.

What Is Buyer Agency?

Buyer agency, or buyer brokerage, is the contractual relationship between a real estate brokerage and a home buyer.

The buyer is represented by a designated agent of the buyer’s choice affiliated with the contracted brokerage. The Buyer Agency Agreement outlines the terms and conditions of the Parties’ duties and responsibilities, as well as timelines and payment of compensation. Buyer Agency was created to balance agent representation in real estate. Prior to the early 1990’s, all brokers represented sellers. Even agents who appeared to be working with buyers were actually functioning as sub-agents of sellers, owing no duties of confidentiality or loyalty to the buyer.

When Do I Need A Buyer Agency Agreement?

• Before the NAR settlement of 2024, buyers had more freedom to choose when they could hire an agent or tour properties without an agreement. But those days are largely over. Under the terms of the 2024 NAR settlement, agents are required to have a signed agreement before performing any substantive work on behalf of a buyer, including touring homes.

• Agency agreements outline the duties and responsibilities of both parties, and contain clear disclosures regarding payment of buyer broker compensation. Buyers and agents negotiate the amount of compensation the buyer is responsible and document it in the agency agreement, which is a binding contract between the broker and buyer.

What It Means For You

Home buyers should begin the home search process by researching the market, assessing their buying power + transaction costs with a local mortgage lender, then interviewing buyer agents.

Buyers do not need a signed agreement to visit an open house, where they may ask hosting agents questions about their services. Agents hosting open houses may not perform any services for buyers without a signed agency agreement, which includes engaging in a detailed discussion of the property, offering advice on the market, offers, etc.

MLS and NAR Roles

The National Association of Realtors (NAR) created the MLS during the early 1960’s primarily to facilitate unilateral offers of compensation by listing brokers to other broker participants within that MLS. After the practice was eliminated in 2024 under terms of a settlement between NAR and various class action lawsuits, MLS is a essentially just a for-profit database of listings, and a rule enforcing arm for NAR.

Both entities are struggling to remain relevant and fighting accusations of monopolistic control. As of mid-2024, there are approximately 517 MLS systems in the U.S., most of which are owned by REALTOR® associations, multiple associations in a regional MLS territory, or they are broker-owned. Calls for decoupling of MLS, associations and NAR have increased since Clear Cooperation was instituted.

As digital platforms like Zillow filter the listings consumers can see based on their profit funnels, and brokerages opt increasingly for off-market listings to protect sellers. Calls for an independent, national MLS have also increased, and ARA was created in response.

This is an evolving situation.

Rules You Need To Know Now

1. Cooperating compensation is banned from MLS. No posting of offers of broker compensation may be included on MLS listings.

2. Written agreements must be signed before touring homes listed by MLS participants. Exceptions are open houses (may require a disclaimer or disclosure to be acknowledged) or showings via the listing agent (possible disclaimer/disclosure requirement).

3. Buyer broker compensation rate and brokerage fees must be disclosed. Broker compensation is negotiable between the parties.

4. Buyers are responsible for payment of buyer broker compensation, must agree to responsibility in the agency agreement, and should not rely on potential agreements of cooperating compensation with sellers.

5. Buyer broker compensation is limited to the amount agreed upon in the Buyer Agency Agreement.

6. As was always the case, buyer agents cannot advertise that their services are “free.” They were never free.

7. Sellers must approve of any cooperating compensation offered to a buyer broker by a listing broker on behalf of the seller.

8. Brokers and Agents must disclose that broker compensation is not set by law, or by GCAAR or NAR, and are fully negotiable.

9. Off-MLS cooperating compensation and/or buyer concessions are allowed.

How Broker Compensation Works Now

1. Sellers will complete a form in their listing package disclosing the amount of buyer (cooperating) broker compensation, if any, they will offer. Agents representing buyers may request this information prior to writing an offer. Buyer broker compensation is paid directly to the broker at closing as a debit on the Seller’s ALTA statement.

2. Sellers are also able to offer buyer broker compensation off-MLS, or offer concessions (such as a general closing cost credit) on-MLS.

3. Broker agreements and addendums to sales contracts will confirm any/all agreements relating to buyer broker compensation.

4. Buyers may pay broker compensation as part of their closing costs at settlement. If the buyer seeks a closing cost concession in lieu of an offer of buyer broker compensation from the seller, the buyer broker fee is shown as a debit on the buyer’s ALTA statement, and the seller concession is shown as a credit.

5. The title company may request a copy of the Buyer Agency Agreement during the transaction processing period to confirm broker compensation responsibility.

6. Broker compensation paid via seller cooperation may not be in excess of the amount stated in the buyer agency agreement.

7. Some buyer agents may require a retainer before providing services. Retainers are held by the brokerage and are non-refundable. Retainers are credited to the buyer broker compensation due at closing.

8. Broker compensation rates haven’t changed much since 1939, and aren’t expected to undergo a dramatic change now. Individual brokerages set their own base rates. Compensation rates are not set by law, NAR, or GCAAR.

9. Most brokerages will continue to charge a brokerage fee.

Practical Application IRL

Any new policy is a bit confusing and this is no exception. Buyers and agents alike are acclimating to revised practices and compensation methods.

New legal actions may further impact agency and compensation, but for now, we have a working system for real estate in Washington DC that provides greater clarity on compensation.

‘In real life’, those thinking about purchasing a home in Washington DC will still review online listings. But when a search becomes serious, it’s time to meet with a skilled real estate agent. Accurate information and experienced human perspective is required to make a decision on one of the largest purchases of your lifetime.

In Steps To A DC Home Purchase, I outline the plan that will make your home search more efficient, effective, and beneficial to you.

Related Pages

• Agents And Agreements

• Why A Good Agent Matters

• Paying Broker Compensation

• Steps To A DC Home Purchase

These articles were originally published in my Tools section at realestateinthedistrict.com. Now they live here—on DC Real Estate Channel.

Disclaimer

We are not investment advisors, attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. It is presented for informational purposes only. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

Fannie Mae and Freddie Mac Just Changed The Rules For Financing Condos

Beginning in August 2026, Fannie Mae and Freddie Mac will dramatically change how condominium projects are reviewed for mortgage financing.

The changes include:

• The near-elimination of the streamlined “Limited Review” process

• Full Review becoming the default underwriting standard

• Increased reserve funding requirements beginning in 2027

• Greater scrutiny of condominium budgets, reserves, insurance coverage, and building condition

• Potential expansion of the list of non-warrantable condominium projects

• Financing challenges for some buyers and sellers

For condominium owners, boards, buyers, and sellers, these changes could affect financing availability, marketability, and property values throughout the Washington DC region.

In This Article

• Who controls condo underwriting rules?

• What changed in 2026?

• Why Limited Review matters

• Why reserve requirements are increasing

• Why more buildings may become non-warrantable

• What this means for DC condo owners

• What buyers and sellers should do now

You can find links for the full series archive at the bottom of each post.

Condominium Underwriting Guidelines

Who Controls Condo Underwriting Rules?

Fannie Mae and Freddie Mac are Government-Sponsored Enterprises (GSEs) that dominate the conventional home loan market in the U.S. They’re private companies with shareholders, boards of directors, and executives, just like any other corporation.

“Government-sponsored” means Congress created them and gave them a special charter to serve a public mission (keeping mortgage money flowing across the country). But they’re not a government agency like the IRS or the military. That said, the situation is a bit unusual right now. Since the 2008 financial crisis, both companies have been in conservatorship under the FHFA (Federal Housing Finance Agency), which is a government regulator. So the government has had unusually tight control over them for almost 18 years now, which blurs the line a bit. Under normal circumstances though, you’d have:

• A Board of Directors they’re accountable to shareholders who own stock in the companies

• The FHFA as their regulator, currently headed by Bill Pulte

• Congress in the background, since it created them and could change their charter

The current government administration wants to take the GSEs public. Here’s more on that.

What Changes Were Made By Fannie Mae In 2026?

Mid-March 2026, Fannie Mae and Freddie Mac announced a sweeping overhaul of their evaluation requirements for condominium mortgage financing.

The new rules represent a major structural reset that will reshape how condo transactions are approved, delayed, or denied.

Fannie Mae and Freddie Mac’s new 2026/27 condo guidelines target lower insurance costs and easing of financing for certain smaller or investor-heavy projects.

Phase One

Key Provisions

Reduced Insurance Costs: By moving from strict Replacement Cost Value (RCV) to Actual Cash Value (ACV) for roofs, and establishing a $50,000 cap on per-unit deductibles (but it’s unlikely this will result in homeowners seeing lower insurance premiums since the dramatic rise in insurance rates will cancel it out, and the DC Council has chosen this time to push a bill increasing the deductible pass-through cap from $5,000 to $25,000, requiring owners to carry expanded insurance coverage, and mandating a waiver of subrogation across all policies);

Increased Financing Eligibility For Certain Projects: Some relaxed rules, including removing the 50% investor concentration limit for established projects and expanding waivers for projects with up to 10 units, are aimed at making it easier to secure financing; but only if other provisions of the new requirements (such as elevated reserves requirements) are met;

Improved Market Access: By relaxing strict, “overly rigid” requirements for insurance, more condos in areas with high insurance rates or a heavy concentration of investors will be eligible for loans–but again, only if they meet other requirements.

Streamlined Insurance Documentation: Lenders can now use insurer statements or appraisals to confirm coverage sufficiency, rather than needing to meet the stricter documentation requirements currently in place.

Downsides

The GSE Blacklist

Fannie Mae and Freddie Mac keep a Condo Project Advisor (blacklist) of buildings they deem ineligible for financing (nonwarrantable) due to safety issues, high deferred maintenance, insufficient reserves, active or pending significant litigation, hotel or resort-like characteristics with transient occupancy (short term rentals), high percentage of commercial space, and/or inadequate insurance coverage. Making this list renders condominium projects ineligible for conventional loans, leaving potential buyers with few options (high-interest, high down payment specialty loans, or cash sales).

How do condominiums end up on this list?

Condos are listed if they fail to meet safety, structural, or financial requirements:

• Deferred Maintenance: Unaddressed “critical repairs” involving structural integrity, water intrusion, or safety systems

• Insufficient Reserves: HOA reserves are too low to fund needed repairs (minimum reserve funding increases from 10% to 15%)

• Special Assessments: Large, ongoing, or pending special assessments suggest financial instability

• Inadequate Insurance: Failure to meet Fannie/Freddie’s high insurance standards, such as lacking adequate flood or wind insurance

• Delinquent HOA Fees: High percentage of owners (15%+) behind on dues

• Investor Concentration: Too many units owned by investors rather than residents.

With new GSE guidelines issued this March, that list is about to expand considerably. Here’s why:

The End of the Fast Track

For years, condo lending relied on a two-track system:

• Limited Review: A streamlined, faster approval process

• Full Review: A slower, comprehensive and document-heavy approval process

That system is ending. Effective August 3, 2026, Limited Review will be all but eliminated and Full Review becomes the default. A narrow waiver applies only in limited cases.

For the tens of millions of Americans who rely on condominiums as an entry point to homeownership, which totals some 10-12% of all housing stock, and count on proceeds from the sale of those condominiums for their next step up the property ladder, the changes could mean an enormous loss in equity and a pronounced downturn in the already beleaguered condo market.

The “Limited Review” process has been the norm for condo financing for many years. Roughly 40% of all condo transactions have relied on this streamlined approval route, which allowed buyers and lenders to sidestep some of the most burdensome documentation requirements. If a condo project met certain basic criteria, it could be approved for conventional loans without exposing the lender or borrower to the full weight of bureaucracy.

That was then. Full Review is now. And the change will be seismic.

How Does The Loan Underwriting Process Change?

The rule changes will result in:

• More documentation

• More scrutiny

• More time

• Higher costs for buyers and less profit for sellers

Under the Full Review process, lenders must evaluate:

• HOA financials and budgets

• Reserve funding

• Insurance coverage

• Structural and maintenance conditions

Many projects will:

• Face delays

• Require additional documentation

• Fail eligibility altogether

Are There Any Exceptions?

Yes, Waiver of Project Review. A limited waiver exists for:

• Projects with 2–10 units, but those with 5–10 units cannot be part of a master association

Meeting this criteria, however, is challenging because many urban developments operate within layered governance structures (master associations).

Phase Two

Reserve Requirements Increase

The 2026 changes alter the underwriting process, while the change taking effect in early 2027 eliminates the 10% floor as the sole reserves underwriting requirement in favor of associations now either following the highest recommended allocation from an updated reserve study or meeting a mandatory 15% budget allocation.

For many associations, this is not a minor adjustment, but a fundamental shift in financial expectations that will be entirely disqualifying.

Why Is The Reserve Requirement An Issue?

Because most condo associations don’t even meet the current 10% threshold.

While some experts say healthy associations should allocate 20% to 40% towards reserves, the norm is far lower. Some associations walk a thin line between scraping by and insolvency to keep monthly dues in check.

As a result, when the 15% rule takes effect, a significant portion of condos that are currently considered “warrantable” (meaning they qualify for conventional financing) will suddenly become “non-warrantable.”

Buyers won’t be able to obtain conventional loans for these properties and unit marketability will be lowered.

As an minimally estimated 40% of condominium associations across the country currently fall into the category of ‘doesn’t meet existing reserve thresholds’, it is curious that the GSEs didn’t first apply stricter adherence practices before implementing a reserve increase. If so many associations are failing at 10%, how does raising the requirement to 15% fix anything? It doesn’t.

One must assume that the GSEs believe non-compliance is willful. In some cases, that is likely the case. But what of the many associations simply struggling to balance maintenance, taxes, insurance and other operating costs with affordability for owners in these economically stressful times?

Local Requirements

While some jurisdictions like Washington DC have no statutory requirement to fund reserves, an increasing number of states (neighboring Maryland included) enforce mandatory independent reserve studies and restrict associations from voting to waive contributions.

The 70% Rule

To be fair, associations have been jollied along in underfunding by industry groups like the Community Associations Institute, which generally suggests that associations aim for a funded ratio of 70% funded ratio to avoid special assessments. No admonitions to fully fund. What message did that send?

A Familiar Pattern of Overcorrection

If this feels like a story you’ve heard before, it’s because you have. The Federal Reserve held interest rates near zero for years after the pandemic; long after the economy had clearly stopped needing the help. When they finally moved, they moved hard: eleven rate hikes in less than two years. Mortgage rates doubled almost overnight. The housing market locked up. And years later, with rates still sitting above 6%, it still hasn’t fully recovered. The ‘solution’ created its own crisis.

The GSEs appear to be running the same play with condo reserves.

For years (decades, really) the 10% reserve requirement sat on the books while underfunded associations quietly let deferred maintenance pile up and pushed expensive repairs into the future. Again, for some a choice, for many a necessity. The Surfside collapse in 2021 was a genuine tragedy, and the urgency it created was real. But urgency isn’t the same as good policy. Instead of a wake-up call, the GSEs took it as a gauntlet thrown. Their response of jumping straight to 15% while simultaneously eliminating the streamlined review pathway that roughly 40% of condo transactions depended on raises a question worth asking: did they design a policy to fix the problem, or for optics’ sake?

The Cost To Condo Owners And Buyers

Raising that bar to 15% while removing the easier compliance route doesn’t push struggling buildings toward safety, it disqualifies them. A building that loses warrantable status loses buyers—in an already struggling condo market—and fewer buyers means falling values. Falling values mean tighter association budgets and less revenue to work with. Which means less money available for the maintenance the GSEs are supposedly trying to protect. The policy meant to force better upkeep creates the precise conditions that make upkeep impossible. It’s not a safety net. It’s a doom loop.

When a condo becomes non-warrantable, the pool of potential buyers shrinks dramatically because without conventional financing, the only remaining option is specialty loans with higher interest rates and down payment requirements. As demand drops, so do home values. Owners who bought at the peak could find themselves underwater, unable to refinance or sell without taking a significant loss, through no fault of their own.

For DC condo owners whose property values have already fallen steeply due to the pandemic, elevated mortgage interest rates, federal job losses and–in some neighborhoods–crime, the options are few. While owners of single family homes can become ‘unintentional landlords’ in similar circumstances, condo owners find themselves hamstrung by condo rental restrictions and long waiting lists.

The GSEs had a more responsible path available; Enforce the 10% rule that was already on the books; strictly, with real deadlines and real consequences; before considering a rise in the threshold. That alone would have shaken loose a significant number of underfunded buildings and forced boards to act.

The Clock Is Ticking

The timing for Fannie and Freddie’s rule changes couldn’t have been worse. Most associations approve their budgets months in advance of each new calendar year. Their budgets for 2026 and first quarter 2027 are already locked in, with little or no room to adjust reserve allocations before the new requirements hit. Local lenders estimate that up to 30% to 40% of older or smaller DC condos will become non-warrantable by January 2027. And the window for compliance is narrowing by the day.

What This Means for the DC Condo Market As A Whole

This storm is landing in an already difficult market. The DC Metro Area is the only Mid-Atlantic market projected to see price drops in 2026. The DC condo market was under pressure long before the announced GSE underwriting changes, with mortgage rates above 6%, declining unit values, limited demand, and a significant inventory overhang.

Northwest Washington, Northern Virginia, and adjacent parts of Maryland have a high concentration of aging mid-rise and high-rise buildings; exactly the inventory these rules are designed to scrutinize. Many of those associations are already carrying deferred maintenance and running lean budgets. For them, the path to 15% doesn’t run through a straightforward budget adjustment. It runs through special assessments, steep fee increases, or both. Owners who purchased expecting stability will be asked to fund the consequences of years of underfunding they had no part in creating.

If owners who must sell and are restricted from renting can’t absorb significant losses, short sale and foreclosure rates will rise, lowering values further, harming every owner in those buildings and the comparable values for neighboring buildings. Entire neighborhoods could see home values plummet. Cities like the District of Columbia that rely on condos to house a significant share of their population could face a cascading series of financial shocks, as property taxes fall and local economies suffer. It’s already happening in the District due to federal job losses and government actions. Added additional stress to a key component of the DC housing market could have serious and long-lasting consequences.

Well-capitalized buildings following the rules will have a genuine competitive advantage. They’ll attract buyers who need conventional financing and can’t afford the risk of a non-warrantable building. Buyers may find themselves in competition for these units, in a market where their only advantage was price negotiation.

“Most DC condo buyers pay cash anyway”

One West End board member of an at-risk association tossed the subject of new requirements off flippantly.

Such an attitude is not only ill-informed and elitist, but a dereliction of fiduciary duty.

While it’s often true that cash buyers are the norm for ultra-luxury buildings, the vast majority of DC condos in low to moderate price ranges (up to $1M) are financed. In two high-end neighborhoods where cash is routinely king, West End and Georgetown, the percentage of cash sales was particularly high in 2025. In West End, a whopping 59% of condo sales were all-cash transactions, as opposed to 41% financed. And in neighboring Georgetown, 54% cash. But the majority of cash sales were in ultra-luxury and investor-heavy buildings. In the $200k–$700k range, DC condo sales are between 70% and 80% financed. For financed owners in all buildings, warrantability is most definitely an issue.

Board members owe a fiduciary duty to all owners, not only investors and the wealthy. They would do well to consider that if 41% of owners in the ‘entry-level’ price point see their values drop into the negative range, being unable to sell to financing buyers will put additional downward pressure on already sinking values. If owners who must sell and are restricted from renting can’t absorb significant losses, short sale and foreclosure rates will rise, lowering values further, harming every owner in those buildings and comparable values for neighboring buildings. Entire neighborhoods could see home values plummet. Cities like the District of Columbia that rely on condos to house a significant share of their population could face a cascading series of financial shocks, as property taxes fall and local economies suffer. It’s already happening in the District due to federal job losses and government actions. Added stress to a key component of the DC housing market could have serious and long-lasting consequences.

What To Do Now

Condo Buyers

• Confirm the building’s financing eligibility before making an offer

• Make offers contingent upon financing and the condominium meeting GSE underwriting guidelines

• Expect longer timelines

• Review HOA financials carefully. If possible, hire a CPA to help

• Be prepared for limited loan options in some buildings

• Consider the potential consequences of purchasing a condominium unit in an association that failed to meet GSE standards

• In short, don’t just ask; “Do I qualify?” Ask; “Does the building qualify?”

Condo Owners

• Share this information

• Research your building’s current financials and condition. Ask whether your building would pass Full Review today

• Request plans from your board for needed changes

• Monitor reserve funding and upcoming budget changes

• Become active in your association, attend meetings, vote

• Prepare for increased buyer scrutiny

• Recognize that timing may impact marketability

• Price for project conditions, not just unit conditions

The financial health of a condo building is no longer a background detail, but a primary driver of value, liquidity, and market access. As these rules take are implemented, the definition of a “financeable condo” will fundamentally change. Be prepared.

Want personal guidance or have questions about condominiums in the District? Reply here or schedule a consult. I’ll help you decode it all!

Series Archive

The Washington DC Condominium Guide

An in-depth series for Washington DC buyers navigating condo purchases.

Parts 1 - 6

Part 1: Condo Basics

What is a condominium? How does condo ownership work? Why buy a DC condo?

Part 2: What Does The Monthly Fee Cover?

Does the monthly association fee seem high? What does it cover, exactly? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.

Part 3: Financing a DC Condo

Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is unwarrantable.

Part 4: Condo Resale Certificate Packages

What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.

Part 5: Condo Q&A

Answers to common questions about purchasing a Washington DC condominium.

Part 6: New GSE Requirements And The Condo Market

The rules for financing condos changed in 2026. More changes are coming in early 2027. Find out what’s different and how it affects you.

This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.

Each post is being updated for this Substack channel, and optimized for clarity and readability.

Disclaimer:

We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

The Real Cost of DC Student Housing: Why Washington DC College Condos Are a Smarter Investment

College Condos: Graduate with a degree and home equity

Every year, when tens of thousands of students plan their move to Washington DC to chase degrees, their families face a tough question: Live in a dorm, rent, or buy a condo near campus?

If you’re exploring DC student housing options, you’ve probably noticed how expensive and competitive things get, whether you’re looking at George Washington University, Georgetown University, Howard University, American University, or the University of the District of Columbia.

But what if your student’s housing expense could become a real estate investment? “College condos” are a strategic way to turn a large, repeating expense into a long-term asset.

That’s what this series is all about: Graduate with a degree and home equity.

What Does Student Housing Cost at DC Universities?

Here are the published “room only” rates (excluding meals and summer) for the 2025–2026 academic year:

• George Washington University: $14,000–$15,000 per year (details)

• American University: $14,000–$15,000 per year (details)

• Georgetown University: $16,000–$19,000 per year (details)

• Howard University: $18,000 per year (details)

• University of the District of Columbia: $12,000 per year (details)

Over four years, that’s $56,000–$76,000 lost to university housing. None of it is tax deductible.

Compare that to off-campus rental rates in a city where the average rent is $2,450, a whopping 22.5% higher than the national average of $2,000 (Source: Zillow). This figure reflects the citywide average across all neighborhoods and unit types. In university-adjacent neighborhoods like Georgetown, Foggy Bottom, and Tenleytown, rents are even higher, which is why average 1BR apartments near DC universities run $31,680–$37,200 per year.

4 years of rent: $126,720–$148,800

Also not deductible.

That’s why more families are researching purchasing opportunities in neighborhoods like Georgetown, Foggy Bottom, West End, Glover Park, Cleveland Park, Shaw and Tenleytown.

Washington DC University Housing Investment: The Case for Buying

A $540,000 two bedroom college condo in Washington DC, purchased with 3.5% down (FHA) at a 6.25% interest rate, would have a monthly payment around $3,209. Add a roommate, and your monthly out-of-pocket drops by nearly half. Here’s our math:

Mortgage Purchase

• Purchase Price: $540,000

• Down Payment: 20% ($108,000)

• Loan Amount: $432,000 (conventional, not FHA)

• Interest Rate: 6.0% (conservative 30-year fixed)

• Condo Fee: $450/month

• Property Tax: $0.85 per $100, minus $91,950 homestead deduction

• Utilities: $200/month (split 50/50)

• Roommate Rent: $1,100/month (smaller bedroom/den)

• Roommate Utilities: $100/month

1. Mortgage Payment (Principal & Interest)

• $432,000 at 6.0% for 30 years:

• Monthly P&I: ≈ $2,589

Calculation:
P = $432,000
r = 0.06/12 = 0.005
n = 360
Monthly = P × [r(1+r)^n] / [(1+r)^n – 1]
= $2,589

2. Condo Fee

• $450/month

3. Property Tax

• Taxable Value: $540,000 – $91,950 = $448,050

• Annual Tax: $448,050 × 0.0085 = $3,808

• Monthly Tax: $3,808 / 12 ≈ $317

4. Utilities

• Total Utilities: $200/month (split evenly, so $100 each)

5. Roommate Rent

• Roommate Pays: $1,100 for den/small BR

• Roommate Pays: $100 for half the utilities

6. Owner Out-of-Pocket Calculation

Total Monthly Costs:

• Mortgage (P&I): $2,589

• Condo Fee: $450

• Property Tax: $317

• Utilities: $200

• Total: $3,556

Subtract Roommate Contribution:

• Rent: $1,100

• Utilities: $100

• Total from roommate: $1,200

Owner Pays:

$3,556 (total monthly costs) – $1,200 (roommate)
= $2,356 per month before tax deductions;

often less than what you’d pay for many private campus housing options.

All-Cash Purchase

Many parents who buy college condos in DC pay cash. That scenario would look something like this:

• Purchase Price: $540,000 (paid in cash)

• No mortgage, so no principal & interest payment

• Condo Fee: $450/month

• Property Tax: $0.85 per $100, minus $91,950 homestead deduction

• Total Utilities: $200/month (split 50/50)

• Roommate Rent: $1,100 for den/small bedroom

• Roommate Utilities: $100

Calculations

1. Condo Fee

• $450/month

2. Property Tax

• Taxable Value: $540,000 – $91,950 = $448,050

• Annual Tax: $448,050 × 0.0085 = $3,808

• Monthly Tax: $3,808 / 12 ≈ $317

3. Utilities

• $200/month total ($100 each)

4. Total Monthly Carrying Costs (No Mortgage)

• Condo Fee: $450

• Property Tax: $317

• Utilities: $200

• Total: $967

5. Roommate Contribution

• Rent: $1,100

• Utilities: $100

• Total from roommate: $1,200

6. Owner’s Out-of-Pocket

• $967 (total costs) – $1,200 (roommate contribution) = –$233 per month before tax deductions

Unlike renting, your home builds equity. After graduation, the property can be sold or retained as an investment property (great to lease to other college students!).

Benefits of buying a DC college condo

• Build equity while earning a degree

• Purchasing offers tax deductions

• Gain tax advantages

• Avoid unpredictable rent hikes, deposit losses, and moving costs

• Enjoy more privacy, control, and security

Many parents find it’s less expensive and far more strategic to buy rather than rent or board.

Learn More About College Condos

Get in touch! Susan will help you break down the best neighborhoods for college condos near every major DC university, so you can match your investment with your student’s campus and lifestyle.

Contact me for a personal consultation on buying student housing in DC.

Disclaimer:

We are not attorneys, legal experts, investment counselors, or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

In the fifth part of my six-part series on Washington DC condos, I answer common questions from buyers.

Part V: Condominium Q&A

What Are CC&Rs, And What’s Included In Them?

Condominium associations operate according to three types of governing documents:

• Covenants, Conditions and Restrictions

• Rules & Regulations

• Bylaws

CC&RS (covenants, conditions, and restrictions) are the package of governing instruments for condominium communities. They stipulate condo owner responsibilities and regulate the use, appearance and maintenance of units and common areas. CC&Rs also define responsibilities and procedures of the condominium board in relation to owners, including rule enforcement and resolution protocols, and insurance requirements, among other aspects of condominium governance.

Bylaws are instruments that dictate matters primarily pertaining to the Board itself, such as election procedures, the various board positions and their associated responsibilities, as well as rules for board governance in general.

Rules and Regulations are concerned with more detailed matters relating to property use, such as smoking prohibition or restrictions, when and how common areas such as fitness centers, pools, atheletic courts, grilling stations, roofdecks and party rooms can be utilized, and pet restrictions. 'Rules and Regulations' is the most often-amended set of condominium instruments.

Who Regulates Condos In DC?

District of Columbia condominiums are regulated by the DC Condominium Act of 1976.

The Act was amended to include an Owner's Bill of Rights with enactment of D.C. Law 21-241. Condominium Owner Bill of Rights and Responsibilities Amendment Act of 2016.

The Condominium Act of 1976 Technical and Clarifying Amendment Act of 1992 (D.C. Law 9-82) regulates the formation, governance, registration and the sale of condominium units;  D.C. Official Code § 42-1901-01 et. seq. (2001), as amended.

The Rental Housing Conversion and Sale Act of 1980, as amended (D.C. Law 3-86) regulates conversion of property into a condominium or cooperative, relocation assistance, the tenant organization registration, the registration of rental residential property offered for sale and tenant opportunity to purchase rights. D.C. Official Code § 42-3401.01 et. seq. (2001), as amended District of Columbia Municipal Regulations, title 14, chapter 47

DHCD Department of Housing & Community Development, is responsible for:

• Affordable Dwelling Units

• Condo and Co-op Conversion and Sales

• Housing Provider Ombudsman

• Housing Counseling

• Housing Resource Center

• Inclusionary Zoning

• Rent Control

The U.S. Department of Housing and Urban Development is responsible for enforcing the federal Fair Housing Act, which prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, because of race, color, religion, sex, familial status, national origin, and disability.

The DC Office of Human Rights enforces the District of Columbia Human Rights Act of 1977 (as amended), which outlaws discrimination based on 23 protected traits for people that live, visit or work in the District of Columbia.

Can I Install A Washer & Dryer In My Unit?

The short answer is "maybe."

Your condominium's rules and regulations should include a section on installation of in-unit washers and dryers.

Buyers searching for properties with the potential for addition of these appliances can filter listings with building amenities that include 'community laundry,' This notation might indicate that the building is not set up for individual installs.

Older DC condo buildings may not have made the plumbing and electrical improvements necessary to facilitate the use of in-unit washers and dryers.

If the building has a community laundry, but the listed unit includes 'in-unit washer/dryer,' check with the management company to confirm that such an upgrade is 'legal' according to the condominium rules, and that proper steps, such as board and/or architectural review, were followed and the install was formally approved.

If plumbing was altered or added for such an improvement, a permit is required. Check with the Department of Building and/or DC Scout records to confirm that a permit was obtained and the work inspected.

Violations for un-approved washers and dryers, as well as permit violations, can result in the appliances' removal and repair to any components not approved or meeting code. These violations transfer to purchasers, so it's important to conduct your due diligence.

Are DC Condoa A Good Investment?

It depends on the project quality and scope, it's location and proximity to amenities DC residents consider vital, such as Metro access, groceries, and restaurants. Neighborhood reputation and conditions play a large part in value, as do:

• Market conditions

• Unit size and floor level

• Floor plan and unit attributes

• Building amenities, including concierge and package room

• Monthly condo dues

• Parking

• Storage

• Views

• Elevators

• Builder reputation

• Management quality

Condominiums are often the first property type to drop in value when the market declines, and the last to recover, so it's important to choose a project and unit that have as many positive attributes as possible.

Will You Review My Condo Docs For Me?

No. Your own due diligence is required. Only you can decide if you’re comfortable with the terms of the association documents. Real estate agents are not permitted to interpret legal language or assess financials. We can not perform as CPAs or attorneys unless we are separately licensed for this purpose. Please solicit the assistance of theese professionals if the need arises.

Can I Sue A Condominium Association Or Board?

This is a legal question, and we are not attorneys. Here are some paraphrased  responses from online experts & authorities:

• Board members have certain fiduciary duties to uphold, which include the duty of care. Failure to uphold these duties can result in homeowners suing condo associations for negligence.

• Embezzlement of corporate funds, fraud and self-dealing can deplete association assets and harm owners. In this circumstance, unit owners may want to sue the offending Board member(s). Such a lawsuit is called a derivative action.

• DC law does provides some immunity to board members to encourage volunteerism, but it is not absolute and can be overcome if the board member's actions qualify as malicious, fraudulent, grossly negligent or violate governing rules or laws. Examples of this might be:

  • Breach of Contract: The association or board has violated the condominium's governing documents

  • Negligence: The association failed to maintain common areas or adequately address safety concerns, and the failure led to harm

  • Mismanagement of Funds: The association misused or misappropriated funds collected through dues

  • Discrimination: Engagement in discriminatory practices that violates Fair Housing laws

  • Selective Rule Enforcement: The association enforces rules inconsistently or unfairly (unequal treatment)

  • Failure to Comply with the Condominium Act: The DC Condominium Act outlines specific rights and responsibilities of both the association and unit owners, and violations of these provisions can lead to legal action

• Condo board members use the Business Judgement Rule to protect themselves from liability. According to the law, the board of directors is immune from personal liability when it can be proven that their actions or decisions were reasonable and made in good faith.

• Typically, the Business Judgement Rule decides in favor of the Board. Board seats are volunteer positions. Few or no community members would agree to provide unpaid service to the board if they could be held legally liable for unpopular decisions. A judge may dimiss the case if the board member(s) are perceived to have acted within the scope of their authority, not fraudulently or unconscionably, even if the decision-making in question was likely poor. To prevail, a unit owner must establish that the condo board member(s) failed to uphold their fiduciary duty to act in the best interest of the association.

Sources:

DC Code § 42–1902.09. Compliance with condominium chapter and instruments:

(a) Any lack of compliance with this chapter or with any lawful provision of the condominium instruments shall be grounds for an action or suit to recover damages or injunctive relief, or for any other available remedy maintainable by the unit owners’ association, the unit owners’ association’s executive board, any managing agent on behalf of the unit owners’ association, an aggrieved person on his or her own behalf, or, in an otherwise proper case, as a class action.

(b) The decisions and actions of the unit owners’ association and its executive board shall be reviewable by a court using the “business judgment” standard. A unit owners’ association shall have standing to sue in its own name for a claim or action related to the common elements. Unless otherwise provided in the condominium instruments, the substantially prevailing party in an action brought by a unit owners’ association against a unit owner or by a unit owner against the unit owners’ association shall be entitled to recover reasonable attorneys’ fees and costs expended in the matter.

(Mar. 29, 1977, D.C. Law 1-89, title II, § 209, 23 DCR 9532b; Mar. 8, 1991, D.C. Law 8-233, § 2(m), 38 DCR 261; June 21, 2014, D.C. Law 20-109, § 2(c), 61 DCR 4304.)

Section References

This section is referenced in § 42-1903.13.

Effect of Amendments

The 2014 amendment by D.C. Law 20-109 added (b).

Cross References

Liens for unit assessments, enforcement and foreclosure sales, see § 42-1903.13.

Want personal guidance or have questions about multifamily home types in the District? Reply here or schedule a consult. I’ll help you decode it all!

Series Archive

The Washington DC Condominium Guide

An in-depth series for Washington DC buyers navigating condo purchases.

Parts 1 - 6

Part 1: Condo Basics

What is a condominium? How does condo ownership work? Why buy a DC condo?

Part 2: What Does The Monthly Fee Cover?

Does the monthly association fee seem high? What does it cover, exactly? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.

Part 3: Financing a DC Condo

Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is unwarrantable.

Part 4: Condo Resale Certificate Packages

What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.

Part 5: Condo Q&A

Answers to common questions about purchasing a Washington DC condominium.

Part 6: New GSE Requirements And The Condo Market

This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.

Each post is being updated for this Substack channel, and optimized for clarity and readability.

Disclaimer:

We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

This is Part IV of my six-part series on Washington DC condos.

It covers “Condo Docs” (aka the condominium resale certificate package). What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained. Plus, legislative updates and links for the Condo Act in the District of Columbia.

Part IV: Condominium Resale Certificate Packages

What Are “Condo Docs”?

This package provides buyers of DC condos with a overview of the property's finances, condo association rules and regulations, and other materials pursuant to "DC Code Section 42-1904.11. Resale by unit owner."

The package is named “Condominium Resale Certificate” but it is commonly known as the “condo docs.” These used to be hard copies, hand-delivered in huge binders. Thank goodness those days are over! Now they’re delivered electronically.

What’s Included? Tell Me In 30 Seconds.

Here’s what the District of Columbia Condominium Act (as amended) says should be included, and when:

The unit owner shall obtain from the unit owners’ association and furnish to the purchaser on or prior to the 10th business day following the date of ratification of the contract of sale, a copy of the condominium instruments and a certificate setting forth the following:

• Appropriate statements pursuant to Section 42-1903.13(h) and, if applicable, Section 42-1903.15, which need not to be in recordable form;

• A statement of any capital expenditures anticipated by the unit owners’ association within the current or succeeding 2 fiscal years;

• A statement of the status and amount of any reserves for capital expenditures, contingencies, and improvements, and any portion of such reserves earmarked for any specified project by the executive board;

• A copy of the statement of financial condition for the unit owners’ association for the then most recent fiscal year for which such statement is available and the current operating budget, if any;

• A statement of the status of any pending suits or any judgments to which the unit owners’ association is a party;

• A statement setting forth what insurance coverage is provided for all unit owners by the unit owners’ association and a statement whether such coverage includes public liability, loss or damage, or fire and extended coverage insurance with respect to the unit and its contents;

• A statement that any improvements or alterations made to the unit, or the limited common elements assigned thereto, by the prior unit owner are not in violation of the condominium instruments;

• A statement of the remaining term of any leasehold estate affecting the condominium or the condominium unit and the provisions governing any extension or renewal thereof; and

• The date of issuance of the certificate.

Small and self-managed associations may not be required to offer the same resale packages as larger, professionally managed associations. Check the provisions in the DC Condo Act for clarity, and consult a professional to assist you with review.

If the required instruments and certificate are not furnished to the purchaser on or prior to the 10th business day following the ratification date of the contract of sale, the purchaser shall have the right to cancel the contract by giving notice in writing to the seller prior to receipt of the condominium instruments and certificate, but not after conveyance under the contract.

What Is ‘Right Of Rescission’?

By definition, “rescission” is the revocation, cancellation, or repeal of a law, order, or agreement.

The DC Condo Act (reference your purchase agreement) essentially gives buyers the right to review public offering statements, association documents and/or resale certifications for a specified number of days from date of receipt and withdraw from an applicable Washington DC real estate transaction should they not find details acceptable.

I wrote an entire page about rescission periods. Take a look:

RESCISSION PERIODS

Buyer Due Diligence Checklist

✅ Review:

• Current budget and financial condition, reserve funds

• Current Bylaws, architectural guidelines, CC&Rs (Covenants, Conditions and Restrictions), rules and regulations

• Monthly association fee and capital contribution

• Master Insurance Policy coverage

• Occupation limitations (number of people who may occupy a unit)

• Statement of unpaid fee assessments, special assessments, and/or planned assessments

• Records of current/pending legal action or judgements by or against the developer, association, board or unit owner

• Certification of filing for the association’s annual report to state board (some associations exempt)

• Records of approved alterations to the unit, if any

• Violation notices to current unit owner(s)

• Delinquent fees for unit/owner

✅ Pay Particular Attention To:

• The financial condition of the association or corporation managing the property

• The condominium's investor ratio (owner-occupents vs renters) and cap, if any on rentals (subject to percentage caps that can render a building unwarrantable)

• Rental restrictions, if any

• Pet restrictions, if any

• Smoking restrictions, if any

• Percentage of association's commercial property square footage, if any (retail components) subject to percentage caps that can render a building unwarrantable

• Percentage of delinquent dues by owners and duration of delinquencies (subject to percentage caps that can render a building unwarrantable)

• Board member term limits

• Levied or planned special assessments

• Liens or judgements against the association

• Repairs in progress, or a schedule of planned repairs, for association

• Improvements or alterations made to the unit. Are they in compliance with board/association regulations and standards? Did the unit owner obtain the proper permitting and inspections, if required?

• Frequency and increments of dues increases. Is there an annual cap on increases?

• Reserves for major repairs or improvements

• Age and condition of major components such as roofs, HVAC systems, plumbing and electrical, elevators, common area elements

• Minutes for the past 3-6 board meetings. Review for discussions of expenditures, repairs, legal proceedings and other issues that might shed light on the association’s future spending and assessment plans, or issues the association or unit owners are experiencing.

✅ Homestead Deduction:

Owners of condominium units may be eligible to receive the benefits of the District of Columbia Homestead Tax Deduction.

This benefit reduces your real property’s assessed value by $84,000 (savings of $714.00) prior to computing the yearly tax liability.

The Homestead benefit is limited to residential property. To qualify:

• An application must be on file with the Office of Tax and Revenue;

• The property must be occupied by the owner/applicant and contain no more than five dwelling units (including the unit occupied by the owner); and

• The property must be the principal residence (domicile) of the owner/applicant.

• If a properly completed and approved application is filed from October 1 to March 31, the property will receive the Homestead benefit for the entire tax year (and for all tax years in the future). If a properly completed and approved application is filed from April 1 to September 30, the property will receive one-half of the benefit reflected on the second-half tax bill (and full deductions for all tax years in the future).

• 🔗 Links:

HOMESTEAD DEDUCTION DC

DHCD REG FOR NEW CONDOS

NEW CONDO OWNERS NEED TO KNOW

Getting into the weeds…

DC Condo Act And Legislative Updates

Familiarize yourself with the DC Condo Act. This is the governing legislation for condominiums in the District.

The District of Columbia Condominium Act of 1974 was amended in 2022, effective in 2023;

The Act was amended in 2016. The Condominium Owner Bill of Rights and Responsibilities Amendment Act of 2016, became effective April 7, 2017;

The Act was amended in 2014.

DC Law 24-262. Condominium Warranty Claims Clarification Amendment Act of 2022

D.C. Act 24-262 amends the Condominium Act of 1976 to clarify standards and procedures governing the resolution of a claim filed upon a condominium developer's warranty against structural defects, to provide that a judicial, non-judicial, regulatory, or administrative proceeding for breach of a warrant that arises under this act shall be commenced within 5 years after the date the applicable warranty period began, to provide that the filing ofa claim with the Mayor shall not preclude the claimant from also seeking to judicially enforce its claim, and to clarify the penalties for violating a provision of this act.

Primary changes:

• The definition for the term “structural defect” was expanded to include DC building code for violations resulting in 'demonstrable harm' to the health or safety of residents, or if units are conveyed before a Certificate of Occupancy is issued by the DoB, or  prior to substantial completion of the condominium;

• The 'resulting damage' caused by a structural defect may now require tbe developer to repair as part of its warranty obligations. Developers  were previously responsible solely for correcting the defect, not necessarily liable for any resulting damages;

• Requires developers to  obtain certified documentation for the project's estimated “hard costs” and supplement their 10% bond with additional funds if actual costs exceed estimated costs by a certain amount. The Mayor must establish a searchable online database for condominium bonds.

• Clarifies the deadline for submitting a claim on the developer's bond. The warranty period is two years from the date of sale, but the time to file claims will be 5 years from the date of sale. Notice and response provisions have been established for associations and developers to follow prior to making claims with the city.

• The Act prohibits condominium instruments from restricting an association from asserting claims for defects against a developer. Previously, developers could (and would) insert procedural roadblocks in the condominium instruments designed to discourage associations from asserting claims. These included requiring an association to engage in mandatory alternative dispute resolution (mediation or arbitration);

• Added with this Act are provisions for appeals of any warranty bond decision to DC’s Office of Administrative Hearings;

• The Act requires a Claims Fund to be established for financial assistance to associations making claims on the warranty bond, for expenses such as inspections, cost estimates, and attorneys’ fees. Eligibility is based on financial need.

These legislative changes to the DC Condominium Act affect:

• Condominium boards

• Unit owners

• Project developers

🔗 Links:

Warranty Claims Act 2022

Registration & Offering

DHCD Regs For New Condos

New Condo Boards

GSE Compliance Changes 2023

Freddie Mac & Fannie Mae Updated Condo | Co-Op Guidelines

In cooperation with the FHFA, Government-sponsored enterprises (GSEs)  Freddie Mac and Fannie Mae updated their guidance for condominiums and cooperatives in 2023, two years after issuance of a 2021 letter by Fannie Mae that created temporary requirements for condos and co-op projects. This action was prompted by the partial collapse of Champlain Towers South condominium in Florida that killed 98 people and injured 14 others.

Primary Changes

Project standards policies for properties in need of critical repairs and special assessments: The project review requirements update is intended to assist lenders in identifying projects that may have issues resulting in unsafe conditions.

🔗 Sources & Resources

Fannie Mae

FNMA Ineligible Projects

Freddie Mac Repair Assessment

FHLMC Condo Mortgages

Who Is Affected?

Any Association legally recognized as a “condominium” or a “cooperative” with more than five units. Regarding the term “condominium”;  Some associations govern properties marketed as townhomes, but which are  legally defined as condominiums. The designation of a property can be confirmed in the Declarations and Articles of Incorporation for the project.

Ultimately, condo buyers are affected—and better protected.

The Fannie Mae Update

Project standards policies update to address projects in need of critical repairs, and projects that have material deficiencies (such as significant deferred maintenance) or special assessments.

These requirements apply to all loans secured by units in condo projects (condo loans) and all cooperative share loans secured by share ownership in a co-op project (co-op share loans) with five or more attached units, regardless of the project review type.

The requirements also apply to loans eligible for delivery under the waiver of project review policy. These project review requirements:

▪ Define critical repairs, material deficiencies, and significant deferred maintenance, including defining routine repairs that are not considered critical;

▪ Prohibit sale of condo loans and co-op share loans in projects in need of critical repairs;

▪ Prohibit sale of condo loans and co-op share loans in projects with current evacuation orders due to unsafe conditions;

▪ Require a review of all structural or mechanical inspection reports that have been completed within 3 years of the project review date;

▪ Provide new requirements for condo or co-op projects with special assessments;

▪ Prohibit sale of condo loans and co-op share loans in projects with unfunded repairs totaling more than $10,000 per unit, and;

▪ Prohibit sale of condo loans and co-op share loans in projects that have an "Unavailable" status in Condo Project Manager™ (CPM™).

This guidance can be found in Fannie Mae's Selling Guide Update which was created in cooperation with the Federal Housing Finance Agency (FHFA).

The Freddie Mac Update

Freddie Mac’s revised guidance was presented as an update to its Condo Project Advisor. All requirements became effective on September 18 2023.

In its messaging to lenders, Freddie Mac wrote:

"On July 29, 2023, we’ll update the “Incomplete Assessment” feedback message in Condo Project Advisor® to indicate when a condo project may need critical repairs. Here’s what you [lenders] need to know:

Currently, if a Project Assessment Request (PAR) submitted to Condo Project Advisor receives an “Incomplete Assessment” feedback message (CPAX1013), that’s an indication that the tool can’t assess the project. This includes the requirement in Section 5701.3(n) that a project is ineligible for sale to Freddie Mac if it needs critical repairs.

On July 29, 2023, we’ll make things easier for you [lenders] by updating one of the “Incomplete Assessment” messages to alert you that the project may need critical repairs. You can determine whether or not a project does indeed require repairs. This can assist you in determining compliance with Guide Sections 5701.2(a) and 5701.2(b)."

🔗 Key Link | Freddie Mac

Critical Repairs & Evacuation Orders: Condominium and Cooperative Project Requirements Tutorial

Summary:

Reserve Study & Funding

A reserve study will satisfy most of the requirements as long as the association is following the recommendations laid out in that study. Fannie and Freddie both require that 10% of operating budget goes to Reserves. (note: Fannie waives this requirement if a reserve study is in place and up to date).

New Reserve Requirements

Fannie Mae and Freddie Mac’s newest guideline change has an increased focus on requiring condo and co-op boards to maintain a 10% or greater reserve line item for future maintenance. Although this requirement has been in place for years, the 10% reserve line-item has often been left out of condo and co-op budgets so unit owners could enjoy lower monthly dues. Some condo and co-op boards have flat-out refused to add the reserve line item to their operating budget.

Freddie Mac still accepts a reserve study to outline appropriate and accurate reserve funding in lieu of the 10% reserve line item.

New Condominium Questionnaire

A new 3-page addendum to the existing condominium questionnaire has been issued. The following are two of the key additions:

• When was the last building inspection by a licensed architect, licensed engineer, or any other property inspector, and did the last inspection have any findings related to the safety, soundness, structural integrity or habitability of the buildings?

• Is the association aware of any deficiencies related to the safety, soundness, structural integrity, or habitability of the buildings?

Lenders now request that associations make affirmative representations about the structural soundness of the buildings. Previously, associations were simply providing information about the property, and the lender would make its own determinations. Boards may now be held accountable if their affirmative representation is inaccurate.

Compliance

• Properties must meet key criteria, including a reserve account with capital sufficient to cover future repairs and replacement of common area mechanical and structural components.

• Compliant properties must also have a current reserve study

• Compliant properties must provide a completed baseline questionnaire which address new GSE questions by attaching an updated reserve study, engineers report, or their equivalent for review.

• Condo and co-op properties must now reserve adequate capital for component repairs. If they do not comply with the new guidelines, financing will not be available.

• Buildings must obtain professional evaluations of components, set aside appropriate funds for future capital repairs and complete repairs to components whose maintenance has been deferred or ignored.

Part V Preview:

Q&A is the final part of this series. I’ll answer common questions about District of Columbia condominiums and the purchasing process. If you have a question that isn’t addressed, drop a comment and I’ll reply!

Want personal guidance or have questions about multifamily home types in the District? Reply here or schedule a consult. I’ll help you decode it all!

Series Archive

The Washington DC Condominium Guide

An in-depth series for Washington DC buyers navigating condo purchases.

Parts 1 - 5

Part 1: Condo Basics

What is a condominium? How does condo ownership work? Why buy a DC condo?

Part 2: What Does The Monthly Fee Cover?

Does the monthly association fee seem high? What does it cover, exactly? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.

Part 3: Financing a DC Condo

Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is unwarrantable.

Part 4: Condo Resale Certificate Packages

What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.

Part 5: Condo Q&A

Answers to common questions about purchasing a Washington DC condominium.

Part 6: New GSE Requirements And The Condo Market

The rules for financing condos just changed (2026). Find out what’s different and how it affects you.

This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.

Each post is being updated for this Substack channel, and optimized for clarity and readability.

Disclaimer:

We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

This is Part III of my six-part series on Washington DC condos. Part III delves into condo financing options, condops and condotels, what makes a condominium “unwarrantable”, how association litigation can torpedo a condo loan, and 2025 conforming loan limits for the District of Columbia.

Part III: Condominium Financing

What Are The Options? Tell Me In 20 Seconds.

Washington DC condominiums can be financed with the same types of loans used for single family properties;

• Conventional mortgage loans: Conforming (matches underwriting guidelines set by GSEs Fannie Mae and Freddie Mac) loans offered by private lenders;

• FHA loans: Mortgage loans insured by the Federal Housing Administration (FHA)*

• VA loans: Mortgage loans guaranteed by the Department of Veterans Affairs (VA). These loans are offered at zero downpayment, with specific provisions designed to help eligible veterans, service members, and surviving spouses purchase, build, or refinance homes*

• USDA loans: Subject to rural area eligibility, condominium project and borrower eligibility

• Assumable mortgage loans: Subject to existing loan type and seller offerings

• Seller Financing: Offered by individual sellers

*Condominiums must meet certain criteria to be FHA and VA approved. Many DC condominiums qualify for these lending programs. Your lender should have a current list of qualifying DC condos.

Want more detail? Use this LLM prompt:

As a residential mortgage expert in the District of Columbia, list the specifics of ____________ (mortgage type), including qualifying criteria for borrowers and GSE underwriting guidelines.

What Are Condops And Condotels?

Though a rarity, condops do exist in the District of Columbia. Here’s what you need to know: 

1. Condop: A hybrid of condo and co-op that typically (but not always) includes commercial spaces (defined as the condo units) such as ground floor retail or arts spaces + residential housing (co-op units) on upper floors. This type of mixed-use building results when one association governs two types of use and the commercial use square footage exceeds GSE underwriting guidelines. Residential owners have shares in the co-op corporation, which holds title to the residential portion of the building and governs its property. Commercial units are independently owned and operated. The residential co-op board has no jurisdiction over this portion of the property or their owners;

2. Condotel: A condominium building operated as a hotel, allowing short term rentals by individual unit owners. This type of hybrid would be subject to both short term rental restrictions + hotel guidelines in the District of Columbia.

Zuzu Notes:

Amenities + staff = higher dues

Some amenities, like fitness rooms, elevators and parking are desirable and contribute to higher resale values, but those condominiums with extensive amenity lists tend to have prohibitively high association dues, especially as the buildings age.

What Is ‘Warrantability’ And How Does It Affect DC Condos?

Warrantable vs. Non-Warrantable Condos

Warrantable condos are those able to be financed with conventional loans. They meet Fannie Mae and Freddie Mac requirements regarding owner occupancy (renter vs owner occupancy ratio), financial health of the association, and percentage of commercial space (portion of restaurant, retail or office space that is part of the same association as the residential housing portion).

Warrantable condominiums are eligible for conventional loans that offer favorable terms such as lower interest rates and down payment requirements as compared to loans for unwarrantable condos.

Non-warrantable condos don't meet GSE standards, which makes them difficult to finance through traditional methods. Special loan programs for non-warrantable condos can carry less favorable loan terms. In some circumstances, cash is the only payment option available.

Warrantability is a tricky part of evaluating condominiums because the information needed to discern whether or not financing will be an issue is not readily available to buyers. Why? There is a procedural gatekeeper. Warrantability information for the association is requested in the form of a ‘condo questionnaire’ sent to the association by the buyer’s lender—after the property is already under contract. Associations often charge a fee for completion of this form, which is returned to the lender, not the borrower. Additional information is found in the condominium resale certificate package (aka ‘condo docs’) which are typically not directly available to buyers. The resale package is ordered and paid for (usually hundreds of dollars) by the seller, once the property is under contract. The regulations on timing for delivery are often in conflict with the timing of contract contingencies. All of this puts condo buyers at a disadvantage, requiring them to contract on condo properties and initiate loans without full understanding of the property’s warrantability.

Here's the general criteria for warrantability:

✅ Occupancy:

A significant portion of units must be owner-occupied primary or secondary residences, not investor-owned rental properties. FNMA typically requires at least 50% owner-occupancy, and FHLMC requirements are similar.

✅ Association Financial Stability:

Financial reserves must be sufficient to cover future repairs and maintenance. A reserve fund of at least 10% of the annual budget is typically required.

✅ Delinquency Rates:

Fannie Mae limits delinquencies on association dues payments. There can be no more than 15% of units 60 days or more past due on condominium dues. Freddie Mac has more stringent requirements. No more than 15% of units can be delinquent on dues for 30+ days, and no more than 15% of units can be delinquent 60+ days on each special assessment.

✅ Litigation:

There should be no pending lawsuits against or involving the association or the project’s developer that relate to the property's structural integrity, safety, or other significant issues. Litigation can derail a mortgage loan and result in a denial.

In 2010, when many lawsuits were brought against developers following the building boom of the 2000’s, I created and implemented a contract provision that protects buyers from losing earnest money deposits due to the seller’s failure to disclose or ignorance of pending litigation involving the association and developer. This simple, one-line provision has saved more than one buyer from a battle over EMD when no contract contingency existed for financing or appraisal: “Subject to condominium meeting GSE warrantability guidelines.” While it has been questioned often by listing agents, it has never been excluded.

✅ Percentage Of Commercial Space:

Both GSEs limit commercial or non-residential space in a condominium project to 35% of the total of the building’s or full project’s above + below grade square footage in order to be considered warrantable. Calculations for this rule consider the total square footage of the project + the square footage dedicated to commercial or non-residential space.

✅ Short Term Rentals:

Fannie Mae’s underwriting guidelines say:

• Even though any STR unit lease will be classified as ‘commercial,’ the property is still residential in nature (not operated as a hotel, condotel, or other single room occupancy arrangement). This mention includes references to ‘space and income limitations per Form 4660,’ which is part of the Fannie Mae Multifamily Guide. It outlines underwriting requirements for space and income limitations for multifamily properties. Limitations aren’t explicit, but the guide references them within the context of underwriting aspects like debt service coverage ratio (DSCR), loan-to-value (LTV) ratio, and interest rate tests. Specifically, the guide indicates that these limitations apply when determining the maximum allowable loan amount and other financial parameters.

• No more than 5% of the Property’s units are available for STR

• There’s also a list of required questions FNMA requires borrowers to answer if STRs are a part of the equation, including; Borrower's action plan for handling liability issues for STR tenants at the Property, Safety concerns for non-STR tenants; Length of time the STR has been in place; Borrower's or master tenant’s insurance coverage for STR, whether or not the STR units are furnished or unfurnished; and confirmation that the STR is legally permissible and in compliance with applicable laws and zoning.

So STRs complicate things and this is just one of the reasons most condominium associations in the District of Columbia prohibit them.

✅ Single Entity Ownership:

Both GSEs have restrictions on single entity ownership of units in a condominium.

Single-entity ownership means an individual, investor group, partnership, or corporation owns more than the following total number of units in the project:

Fannie Mae underwriting guidelines impose limits on:

• Projects with 5-20 units - To 2 units

• Projects with 21+ units - To 20%

Units currently subject to any rental or lease arrangement must be included in the calculation. This includes lease arrangements containing provisions for the future purchase of units such as lease-purchase and rent-to-own arrangements.

Exclusions from the single-entity ownership calculation include:

• Units owned by the project sponsor or developer which are vacant and being actively marketed for sale (new construction)

• Units controlled or owned by a non-profit entity for the purpose of providing affordable housing, and units held in affordable housing programs (including units subject to non-eviction rent regulation codes), or units held by higher-education institutions for a workforce housing program

The single-entity ownership requirement may be waived when the transaction is a purchase transaction that will result in a reduction of the single-entity ownership concentration. Then, the following requirements must be met:

• Units owned by the single entity represent no more than 49% of the units;

• Evidence is required that the single entity is marketing units for sale to further reduce single-entity ownership, with the goal of reducing the concentration to 20% or less of the project units;

• The single entity is current on all dues and other assessments; and

• There are no pending or active special assessments in the project.

✅ Project Completion:

The condominium project should be completed, and the association controlled by unit owners.

For a condo project to be deemed "warrantable" by Fannie Mae and Freddie Mac, it needs to be ‘substantially complete.’ That means means the common elements are finished and the units are completed, except for buyer preference selections. More detail on this:

1. Legal Phase Or Building:

Subject legal phase or building: The specific legal phase or building containing the unit being financed, as well as any preceding legal phases where units have been offered for sale, must be "substantially complete".

Legal phases: Legal phases are defined by the project's official documents, not developer construction or marketing phases.

Buyer selection items: Typical buyer selection items (appliances, flooring, etc.) are generally not required to be installed, but any choices involving modifications to the unit floor plan must be completed.

2. Established Projects:

Established projects must be 100% complete and at least 90% of the units must have been conveyed to buyers.. There are exceptions for projects where the developer retains units for rent, provided construction is complete, no further phasing is planned, and the developer's rental share does not exceed 20%.

Read the full Fannie Mae and Freddie Mac guidelines for project completion.

2025 Conforming Loan Limits

The conforming loan limit is the maximum amount a homebuyer can borrow with a mortgage. The 2025 limit for the District of Columbia is 150% of the baseline limit of $806,500 for a single-family home. or $1,209,750.

The conforming loan limits for multifamily are:

2 units: $1,032,650

3 units: $1,248,150

4 units: $1,551,250

The Federal Housing Finance Agency (FHFA) sets conforming loan limits, which are based on home prices across the country.

Part IV Preview:

In the fourth part of this series, we’ll discuss Resale Certificate Packages (“Condo Docs”) for District of Columbia condominiums.

Want personal guidance or have questions about multifamily home types in the District? Reply here or schedule a consult. I’ll help you decode it all!

Series Archive

The Washington DC Condominium Guide

An in-depth series for Washington DC buyers navigating condo purchases.

Parts 1 - 5

Part 1: Condo Basics

What is a condominium? How does condo ownership work? Why buy a DC condo?

Part 2: What Does The Monthly Fee Cover?

Does the monthly association fee seem high? What does it cover, exactly? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.

Part 3: Financing a DC Condo

Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is unwarrantable.

Part 4: Condo Resale Certificate Packages

What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.

Part 5: Condo Q&A

Answers to common questions about purchasing a Washington DC condominium.

Part 6: New GSE Requirements And The Condo Market

The rules for financing condos just changed (2026). Find out what’s different and how it affects you.

This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.

Each post is being updated for this Substack channel, and optimized for clarity and readability.

Disclaimer:

We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

This is Part II of my five-part series on Washington DC condos. Part II covers monthly association fees—what they cover, how often they should increase, how high fees can depress unit values, and what happens when association fees fall short and special assessments are needed.

Part II: Association Fees

What Is An Association Fee?

All Washington DC condominiums assess a monthly fee to cover maintenance, operation and administrative costs. These fees are often referred to as “condo dues” because they’re assessed to every member of an association. Condo dues typically take the form of a monthly payment, the amount of which is based on the square footage of the home, plus any limited common elements assigned to the unit (such as a parking space or storage unit).

Tell Me What Condo Dues Cover In 20 Seconds

Association dues in the District are different for each condominium, but primarily cover: 

• Common area maintenance (exterior structure, grounds, upkeep of lobby and other common areas, common area furnishings, interior hallways, elevators and stairways, trash facilities, trash collection, garage maintenance, and amenity area & equipment upkeep);

• Mechanical maintenance, repair and replacement (electrical, plumbing, heating and cooling for common areas);

• Roof and gutter maintenance;

• Staff (such as maintenance staff, concierge, security staff, etc.);

• Management (on-site or off-site);

• Services;

• Master Insurance Policy (covers the common areas of the condominium);

• Legal retainers and fees.

Think of association dues as shared costs for property operation and maintenance that single family homeowners pay individually, some of which aren’t realistic (concierge, maintenance crew) in non-multifamily residential settings.

Zuzu Notes:

Larger DC condominium projects typically include water, sewer, trash and snow removal as part of covered items in condo dues.

Some condominiums may include water or other utilities, especially those with common laundry facilities.

How Often Should Condo Dues Increase, and by what percentage?

Most experts recommend an annual increase for condominium dues so that the association’s reserves can meet demands of inflation and cover rising costs associated with wear and tear on buildings, equipment and cosmetic features.

The recommended increase varies between 3-5%, depending on the association’s budget, reserves, repair and replacement needs, etc.

Here's what associations generally take into account:

1. Inflation: Annual ‘cost of living’ increases on existing services, goods and staff

2. Future Projects: Setting aside funds for upcoming improvements and upgrades, and/or addition of amenities such as a sports court or fitness center

3. Required Minimum Reserves: GSE (government-sponsored enterprises) FNMA (Fannie Mae) and FHLMC (Freddie Mac) set the standards lenders must follow to ensure the loans they sell to them are eligible for purchase. One of these standards is the requirement for condominiums to maintain a minimum level of reserves—sufficient to cover the costs of repairing and replacing major capital items as they approach the end of their life expectancy. Fannie Mae updated its guidelines in August 2023, requiring appraisers to place addded focus on safety features and infrastructure, examining significant deferred maintenance, as well special assessments and condominium loans. The Condominium Act also outlines reserve requirements, which can vary by geographical location.

Here are the advantages of a well-funded association:

✅ Eliminates Deferred Maintenance:

Associations that are financially stable have the ability to proactively address maintenance issues that would otherwise escalate and become more expensive and damaging.

✅ Helps Prevent Special Assessments:

Sufficient reserves are key to an association’s overall financial stability and ability to cover unexpected or major repair costs. Without adequate reserves, special assessments might be required to keep the condominium operational and in good repair. Special assessments can be a substantial financial burden on residents and a hinderance to resale.

✅ Complies With Lender And Jurisdictional Requirements:

Many lenders and underwriting guidelines require an adequate level of reserves for condominium projects to be eligible for financing.

In addition, some states have statutory requirements for reserve studies. The District of Columbia and Maryland do not have statutory guidance or a statutory requirement for a reserve study. Maryland does have a reserve funding requirement. Virginia has statutory guidance for reserves, but not a statutory requirement.

✅ Enhances Property Value:

Home buyers and lenders are reassured of a condominium’s value when the association is circumspect about finances, commissions reserve studies, and ensures that the reserve fund is adequate for its needs, both present and future. This contributes to the property’s value and reputation.

What Happens When Monthly Dues Get Too High?

If you’ve ever seen a listing for a 500 square foot condo with a $900 monthly fee, you’ve asked yourself; “What went wrong here?”

Since fees escalate annually—or should—it stands to reason that long-established condominiums will have unit fees far exceeding those of brand new condominiums and those with elements still under warranty.

At some point, however, it’s difficult to build value to buyers on the resale market when the monthly association fee equals or exceeds the monthly mortgage payment for a unit. Typically, this results in unit values dropping. The home is worth less because the operation costs are so high—-and while mortgage interest may be tax deductible, condo fees for owner-occupied units generally are not.

When you’re shopping for a condominium, it’s important to look at fees, the age and condition of the property, budget, reserve study and other documentation included in the association documents in addition to sales price. You may find that what initially seemed like a bargain is actually a poor investment.

Explain Special Assessments

If an association is underfunded and a major, unexpected repair surfaces, a special assessment may be needed to offset the cost.

The dreaded phrase “special assessment” can inflict considerable trauma on condo owners, and serve as a red flag to buyers. They are the additional fees levied on unit owners by a condo association when reserves don’t cover a major issue.

Special assessments may become necessary when:

1. Major emergency repairs crop up unexpectedly, or become urgent due to deferred maintenance. Examples include roof failure or damage, structural issues, Plumbing failures, HVAC or electrical failures.

2. Large-scale capital projects that exceed reserves are necessary. Examples can include updating aging infrastructure, replacing swimming pools, rebuilding balconies and terraces.

3. Legal or regulatory compliance. Examples include lawsuits against the association, settlements, fines, etc.

While condo associations secure Master Insurance Policies insurance for common areas, when policy caps are exceeded, costs fall to the unit owners.

Some condo insurance policies offer optional "loss assessment coverage" to help with special assessment costs.

Who Decides If A Special Assessment Is Needed?

The condo board.

How Does Assessment Work?

The assessment is levied against all units, and the amount per unit is typically determined by the percentage of ownership in the building (which is often based on square footage).

Governing documents such as the CC&Rs (Covenants, Conditions and Restrictions) outline the procedures for levying special assessments and may include limitations or voting requirements. In some states, laws regulate special assessments.

Payment of special assessments is typically made in a single lump sum or via an installment plan.

What Is A ‘Capital Contribution’?

It’s a one-time, up-front fee, usually equal to two or three months’ condo dues, for joining the association. Capital contributions are not credited towards condo dues. Every new unit member pays them as part of their closing costs at the time of purchase.

Also known as transfer or initiation fees, capital contributions are deposited into the association’s reserve fund to help cover costs of major repairs, replacements, and additions to common areas and amenities.

Part III Preview:

In the third part of this series we’ll discuss financing for District of Columbia condominiums.

Want personal guidance or have questions about multifamily home types in the District? Reply here or schedule a consult. I’ll help you decode it all!

Series Archive

The Washington DC Condominium Guide

An in-depth series for Washington DC buyers navigating condo purchases.

Parts 1 - 5

Part 1: Condo Basics

What is a condominium? How does condo ownership work? Why buy a DC condo?

Part 2: What Does The Monthly Fee Cover?

Does the monthly association fee seem high? What does it cover, exactly? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.

Part 3: Financing a DC Condo

Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is unwarrantable.

Part 4: Condo Resale Certificate Packages

What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.

Part 5: Condo Q&A

Answers to common questions about purchasing a Washington DC condominium.

Part 6: New GSE Requirements And The Condo Market

The rules for financing condos just changed (2026). Find out what’s different and how it affects you.

This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.

Each post is being updated for this Substack channel, and optimized for clarity and readability.

Disclaimer:

We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

Part I of my six-part series on Washington DC condos walks you through the basics on condo structure, ownership and attributes, helping you decide if condominium ownership is an option you’d like to pursue further.

Part I: The Basics

What Is a DC Condominium?

Is it the right choice for you? Let’s find out.

A Washington DC condominium isn’t a certain type of building or architecture. It can take many different shapes and forms. In basic terms, it’s ownership of an individual share in an owner’s association. The definition of a condo “unit” is defined in the governing documents. It can be anything from a commercial or industrial building to a boat dock.

Tell Me About DC Condominium Ownership In 20 Seconds

Here are the basics on residential condo ownership in the District: 

• A standard mortgage loan can be used to purchase a condominium if it meets conventional underwriting guidelines (which just changed: See Part VI);

• Purchasers of a condominium unit will receive a deed to the unit, and a percentage interest in the common elements;

• Association dues are based on unit size as well as any additional components, including limited common elements controlled by the unit owner (like parking and storage spaces);

• Unit owners must comply with rules and restrictions outlined in the association bylaws;

• Unit owners are eligible to run for a seat on the condo board;

• Depending on the rules, unit owners may have the ability to lease their units;

• Unit owners may sell a condominium unit at will.

Most important factors? Think about financing qualifications and reselling before you buy. Ask:

• Is the condominium in a location that appeals to the typical DC condo buyer demographic? Consider Metro access, security, convenience to shopping, retail and dining amenities, unit size, floor level, elevator access, storage and parking, in-unit washer/dryer and private outdoor space;

• Is the association well run? Is the building clean, secure and well-maintained? Is the budget healthy? Do reserves meet GSE requirements? What’s the capital contribution?

• Is the building non-smoking?

• What is the pet policy?

• Are there rental restrictions? If so, what’s the investor ratio and cap, waiting list length, re-rent waiting list rules, minimum lease term, etc.?

• Are association dues higher than the average for buildings in the immediate area?

• Is there a large commercial/retail component that would make financing difficult?

• Does the unit sit over a parking garage door, trash collection area or alleyway? Is it too close to the elevator or trash room?

• Have sellers over the past 3 years built equity?

Zuzu Notes:

Nearly all condominiums in DC prohibit short term rentals (STR) like Airbnb.

Most condominiums require a minimum six month lease for renters.

Why Buy A DC Condominium?

The decision between purchasing a DC condominium and a townhome or single-family home largely depends on individual preferences, lifestyle, and specific needs. Here are some reasons why a buyer might prefer a condominium:

1. Lower Price
   Condos are typically less expensive than other home types in Washington DC. First-time buyers, move-down buyers and buyers of pied-à-terres often choose condominium ownership for this reason.

2. Lower Maintenance Responsibility
   Condominiums involve less hands-on maintenance for individual unit owners. Exterior building and common area maintenance, landscaping, and general upkeep are usually managed by the condo association, allowing residents more time and less responsibility for property care. This appeals to those who travel, utilize the property as an occasional residence, or dedicate an extensive portion of their time to work or other pursuits.

3. Amenities And Services
   Condominiums often offer shared amenities such as fitness centers, package rooms, lounges, roofdecks and swimming pools, as well as concierge, maintenance and management services. They provide added convenience and lifestyle benefits that may be cost-prohibitive or impractical for individuals.

4. Location
   Condos are often situated in desirable DC locations with easy access to public transportation, restaurants, cultural attractions, and other city amenities clustered in areas zoned primarily for multifamily, commercial and retail density.

5. Security

   Many condominiums have security features such as controlled access, doormen, surveillance systems and package delivery services and facilities. This can provide a sense of security, especially for those who travel frequently or reside part-time in the District, that may be more challenging to achieve for an individual residence.

6. Affordability and Lower Upfront Costs

   Condominiums can be more affordable than single-family homes in Washington DC. Lower costs associated with condo living such as shared maintenance and structural repair expenses make homeownership more accessible.

7. Community Living

   Condo living often fosters a sense of community. Residents share common spaces and may participate in condo association activities or meetings, providing opportunities for social interaction and community engagement.

8. Downsizing And Single Floor Living

   Condos can be an attractive option for buyers looking to downsize or simplify their lifestyle. The smaller footprint and one floor options associated with condos mean increased mobility and less upkeep, making it a suitable choice for those seeking an easily accessible and manageable home. One floor living is a primary benefit for many move-down buyers in the District, where multistory single family homes with stairways are the norm.

While condominium ownership and the condo lifestyle have advantages, it's essential for buyers to carefully consider their lifestyle needs, resources, preferences, investment strategy, long-term goals, and compare them to the specific characteristics of individual properties

Part II Preview:

In the next part of this series we’ll break down the monthly fees for District of Columbia condominium ownership.

Want personal guidance or have questions about multifamily home types in the District? Reply here or schedule a consult. I’ll help you decode it all!

Series Archive

The Washington DC Condominium Guide

An in-depth series for Washington DC buyers navigating condo purchases.

Parts 1 - 6

Part 1: Condo Basics

What is a condominium? How does condo ownership work? Why buy a DC condo?

Part 2: What Does The Monthly Fee Cover?

Does the monthly association fee seem high? What does it cover, exactly? Are there ‘hidden’ fees? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.

Part 3: Financing a DC Condo

Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is nonwarrantable.

Part 4: Condo Resale Certificate Packages (‘Condo Docs’)

What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.

Part 5: Condo Q&A

Answers to common questions about purchasing a Washington DC condominium.

Part 6: New GSE Requirements And The Condo Market

The rules for financing condos just changed (2026). Find out what’s different and how it affects you.

This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.

Each post is being updated for this Substack channel, and optimized for clarity and readability.

Disclaimer:

We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.

Timing the market.

Everyone thinks it means watching mortgage rates and waiting for the “right” listing to

magically appear.

But in DC real estate? That’s a great way to miss your best shot.

I’ve worked with hundreds of buyers, (first-timers, upsizers, downsizers, pied-à-terre buyers, newbie and experienced investors), and I nearly always find that they want to feel “ready” before they act.

Pro Tip: In DC, you act to get ready—not the other way around!

🕒 Common Buyer Timing Mistakes

1. Waiting for rates to drop before getting pre-approved
   Rates move, but competition adjusts faster. If you wait for a better rate, you’re often buying into a hotter, faster market.

2. Searching online for 6 months before talking to an agent
   You’ll end up building your strategy on algorithms, not insight. Zillow doesn’t show all home listings (did you know that?). It also doesn’t know about your local comps, off-market options, or what’s really driving price gaps. Most buyers are shocked to find that the DC market typically sells ahead of comps.

3. Wanting “a few more months to save” but not modeling impact
   Waiting might make sense in certain circumstances, but often the market outpaces your savings rate. If the price of the home you want rises faster than what you’re banking monthly, waiting is a net loss.

✅ What Actually Works in DC

• Start with strategy, not listings.
  The right timeline starts by asking: “What are your primary and financial goals, and what kind of property fits both?”

• Get pre-underwritten early—even if you’re months out.
  You’ll learn what kind of offers you can write, and it’s very possible you’ll catch an off-market or private listing before competition heats up.

• Map your buy vs. rent math with real DC figures.
  I help buyers model 12–24 month break-evens. Sometimes renting is better—but you should know that upfront, not after missing 3 opportunities.

Zuzu’s Truth:

DC real estate doesn’t reward the most patient buyer.
It rewards the most prepared one.

That’s why I created this playbook. It’s not about speed or pressure—it’s about precision.

💬 Want a one-on-one prep session?
Reply here or visit buy at realestateinthedistrict.com to set up a strategic buyer consult.