Fannie and Freddie unveil changes to lower condo insurance costs.

The Federal Housing Finance Agency proposed updates allowing Fannie Mae and Freddie Mac to accept actual cash value roof coverage and simpler deductible rules for condos, which the agency says should help more buildings qualify for mortgages and reduce some owners' insurance costs.

Fannie Mae and Freddie Mac are covered by a set of insurance rule changes proposed this week by the Federal Housing Finance Agency. The updates allow condo buildings to use actual cash value coverage for roofs while keeping replacement-cost protection for the rest of the structure. The FHFA says the moves should help more condo buildings qualify for mortgages and lower some owners' insurance costs. Rising construction costs and more frequent severe weather have pushed insurance prices higher in recent years. Key details: - The proposal permits actual cash value (ACV) coverage for roofs and maintains replacement cost value (RCV) for other parts of a building, and it also simplifies rules around deductibles. - The FHFA described full-replacement roof coverage as increasingly expensive and hard to find in many states, and said the changes would preserve mortgage access for affected buildings. - Insurify projects average home insurance premiums to rise about 4% in 2026, and NerdWallet reports the average U.S. homeowner spends roughly $2,490 a year on home insurance. - Condo owners in Florida have faced higher homeowners association fees after new building-safety laws passed following the Surfside collapse, and that has affected sales and affordability in some markets. - FHFA Director Bill Pulte and several Republican officials issued statements framing the updates as a reversal of prior insurance requirements; industry sources such as a Realtor.com economist said the provisions could support demand in the condo segment. - The FHFA also announced a separate change that takes effect January 4, 2027, requiring condo groups to allocate 15% of annual budgeted income to capital expenditures and deferred maintenance, up from 10% today. Summary: The proposed FHFA updates are intended to expand insurance availability for some condo buildings and ease certain insurance costs, which could affect mortgage qualification in those properties. At the same time, a coming 2027 rule increasing required reserve allocations for condo associations could raise overall association costs. Undetermined at this time.