The 15% condo reserve rule: how the floor works from January 2027

Of the two condo reserve tests that arrived with Fannie Mae's Lender Letter LL-2026-03, the 15% floor is the one a board can check on the back of an envelope — and the one with a date attached that lands in the middle of budget season.

The rule

For Full Review applications dated on or after January 4, 2027, the association's annual reserve contribution must be at least 15% of its total annual budgeted assessment income, unless a qualifying reserve study is used.

Two definitions carry the whole test. The reserve contribution is the reserve line in the adopted budget — what the association puts aside this year, not what it has in the bank. The base is total budgeted assessment income: the regular assessments for the fiscal year. The Selling Guide permits exclusions for special assessments, reserve-allocated income, certain utilities and incidental income. ReserveGap uses the base you enter and does not calculate those exclusions.

A worked example

An association budgets $1,000,000 of assessment income. The floor is 15% × $1,000,000 = $150,000. If the budget's reserve line is $120,000, the test shows a gap of $30,000 a year. Not a fine, not a violation — a difference against this percentage benchmark. A lender must evaluate the applicable review pathway, including any qualifying study.

The prior 10% rule

The floor is not new — the level is. Conventional project reviews have long looked for 10% of budgeted income going to reserves. The lender letter raises that to 15%. A budget that cleared the old floor at, say, 12% clears the prior percentage benchmark but falls below the January benchmark; that is why the date matters more than the percentage for most boards.

The qualifying-study exemption

The percentage benchmark has a reserve-study alternative, subject to lender acceptance and the highest recommended allocation. A study or update must be within three years of the lender’s project decision date; recency alone does not establish acceptance. The lender must assess the other criteria in the Full Review guidance.

What this means for budget season

Boards adopting their next budget this fall are writing the numbers a January application will be tested against. The arithmetic takes one meeting: multiply budgeted income by 15%, compare it to the reserve line, and compare the reserve line to the study's highest recommended contribution. The check below does both in your browser and stores nothing.

What the budget collects this year ($)

$

Enter the assessment-income base from the budget. Lender-permitted exclusions are not calculated here.

What you're putting into reserves this year ($)

$

Current annual reserve contribution — the reserve line in this year's budget.

Highest amount the reserve study says to put in ($)

$

Highest recommended annual contribution — the largest funding schedule in the study. If it shows one schedule, use that.

Cash sitting in reserves today ($)

$

Reserve cash on hand — all reserve accounts, as of a stated date.

State

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Florida's rule is built in. The state-rule check on the paid report needs the study's component schedule.

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For the study alternative, read how the highest recommended contribution works. For the wider project context, see what changed when Limited Review ended. Use the free condo reserve calculator with your own figures.