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 mortgage 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, before special assessments.
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 project-eligibility gap that a lender's review will find on the next application dated January 4, 2027 or later.
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% passes today and gaps in January; that is why the date matters more than the percentage for most boards.
The qualifying-study exemption
The floor applies unless a qualifying reserve study is used — the path through the other test, where the budget funds the study's highest recommended contribution. A current study whose recommended schedule the budget actually adopts can substitute for the flat percentage. What makes a study "qualifying" — including how recent it must be — is defined in the eligibility guidelines, and it is the first thing to confirm with the lender rather than assume.
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.