What should I look for in HOA financials before buying a condo or townhome in Colorado Springs?

Start with the lender, not the spreadsheet

What I tell buyers is to contact their lender and make sure the condo or townhome is warrantable. Do it early, before you're attached to the unit.

Warrantable means the project meets the standards a conventional lender applies, which are set by Fannie Mae and Freddie Mac and apply to the whole building, not to your unit. If the project fails, every owner in it is affected — financing gets harder, the buyer pool shrinks to cash and portfolio lenders, and resale value follows.

This matters more in 2026 than it did in 2025, because the rules changed substantially.

What changed in 2026

Fannie Mae issued Lender Letter LL-2026-03 on March 18, 2026, aligned with Freddie Mac and coordinated with FHFA. The pieces that affect a buyer:

The practical effect for a Colorado Springs buyer: expect project review to take longer and dig deeper, and expect a building with thin reserves to have a harder time. A community funding reserves at the bare minimum today may not clear the bar in January 2027.

What to look for in the numbers

Once the lender says the project is viable, here's where I'd spend your reading time.

Reserves. How much is in the reserve fund, what percentage of the budget goes to it annually, and when the reserve study was last done. Studies older than three years are generally treated as unreliable. A reserve study is a professional assessment of every shared component — roofs, siding, paving, boilers, elevators — and what it will cost to replace each one on what schedule. An association with an old study and a thin balance is telling you a special assessment is coming, whether or not anyone has said so.

Special assessment history. How many in the last ten years, what for, and how large. A pattern of special assessments usually means reserves are being run deliberately thin to keep monthly dues attractive.

Delinquencies. What share of owners are behind on assessments. High delinquency shifts the burden to everyone still paying and is one of the criteria that can make a project ineligible for conventional financing. Your lender can confirm the current threshold.

The budget itself. Whether dues have kept pace with costs. Insurance and maintenance have risen sharply here, and a community that hasn't raised dues in five years hasn't avoided the cost — it has deferred it.

Litigation. Particularly construction defect actions, which have their own disclosure requirement in the contract.

Single-entity ownership. Whether one party owns a large share of the units, which is a separate project eligibility question.

Insurance is the pressure point in this market

Insurance is the thing I'd watch most closely, because it keeps growing on owners, and in some cases associations try to transfer the insurance obligation to the individual unit owners.

That's not a hypothetical, and the 2026 lender letter puts numbers on it:

• A master policy's per-unit deductible is now capped at $50,000 for loans with applications dated on or after July 1, 2026.
• Where a master policy carries a per-unit deductible, the unit owner must carry their own policy covering at least the amount of that deductible.
• Individual unit owner policy deductibles are capped at the greater of 5% of the coverage amount or $2,500.
• Fannie Mae retired the requirement to insure roofs on a replacement cost basis for both master and individual policies. Roofs must be insured, but actual cash value is now acceptable.

That last one deserves a hard look in a hail market. Actual cash value on a roof means depreciation comes out of the claim, and the gap lands on the association — which means on the owners.

So when you read the insurance summary, find three things: the per-unit deductible, whether the master policy is "bare walls" or "all-in" (which decides where the association's coverage stops and yours begins), and how roofs are settled.

One open question worth raising with the board, because it's a fair thing to wonder: if the insurance obligation is being pushed onto individual owners, what happens when a neighbor doesn't keep theirs up? Financed owners are required by their lender to carry coverage, but an owner who paid cash isn't under the same pressure. Colorado's common interest ownership statute requires associations to maintain property insurance on the common elements, so the association's own coverage is the backstop. How well that works in practice depends on the association, and it's a question the board should be able to answer.

Condo, townhome, or something in between

The word "townhome" describes a building style, not a legal structure, and the difference matters for financing.

If you own the land under your unit, the community is usually underwritten as a planned unit development, and project review is much lighter than for a condominium. If you own only the airspace inside the walls with the structure owned in common, it's a condominium for lending purposes no matter what the marketing calls it.

Ask which one you're buying. Your lender and the title commitment will both tell you, and it changes the review your loan goes through.

What could change the answer

• The January 4, 2027 reserve increase. A project that qualifies today may not in January.
• Which loan you use. FHA and VA maintain their own condo project approval processes with different criteria.
• Cash. A non-warrantable project is still buyable with cash or portfolio financing, but understand you're buying into a smaller resale market.
• The association's response. Boards that raise dues and commission a current reserve study can restore eligibility.
• Insurance renewals. A master policy renewal can change the per-unit deductible, and with it what your own policy must cover.
• Further guidance. These standards have moved repeatedly since 2021 and will move again.

When to talk with a professional

Your lender is the one who determines whether a specific project is financeable, and that conversation belongs at the start of the search. An insurance professional should read the master policy alongside your own coverage, especially the deductible and roof settlement terms. For a live construction defect claim or a governing document problem, that's a real estate attorney. For a broader read on association rights and obligations, the HOA Information and Resource Center at the Division of Real Estate is at (303) 894-2166. I'm a real estate professional, not a lender, an insurance agent, or an attorney.

About the author

Weldon Hobbs is a Colorado Springs REALTOR® and co-founder of Team Hobbs Realty. He is a member of The Platinum Group, REALTORS®, Colorado Springs' #1 independent brokerage, which pairs deep local expertise with premium marketing exposure. A U.S. Air Force Academy graduate and retired Air Force veteran, he and his family made more than 10 military moves. Since 2006, he and his wife, Kristen, have bought and sold their own homes, managed a portfolio of rental properties, and guided others through their own real estate decisions. He has also helped both family members and clients downsize, where the decisions are often complex and the process can feel overwhelming. Drawing on his background as a PMP® (Project Management Professional), he helps people break those decisions into clear, manageable steps.

Since beginning his real estate career, he has ranked in the top 7% by sales volume among the more than 4,000 members of the Pikes Peak Association of REALTORS®. He works with military families, seniors and downsizing clients, luxury and premium home sellers, and people relocating to Colorado Springs. He developed the Life → Wealth → Real Estate™ method, hosts the national YouTube channel Life & Real Estate Without Regret, and holds an MBA along with the SRES® (Seniors Real Estate Specialist®), MRP (Military Relocation Professional), and Certified Financial Coach credentials. More about Weldon

Sources

• Fannie Mae, Lender Letter LL-2026-03: Updates to Project Standards & Property Insurance Requirements, March 18, 2026 — retirement of Limited Review, enhanced reserve study requirements, the 10% to 15% replacement reserve increase, expanded Waiver of Project Review, retirement of investor concentration limits, the $50,000 master policy per-unit deductible cap, individual policy deductible limits, and the retirement of the replacement-cost roof requirement. singlefamily.fanniemae.com
• Fannie Mae, Selling Guide Chapter B4-2, Project Standards, and Chapter B7-3, Property and Flood Insurance — project eligibility criteria including delinquency, single-entity ownership, critical repairs and litigation. selling-guide.fanniemae.com
• Colorado Common Interest Ownership Act, C.R.S. § 38-33.3-101 et seq., including § 38-33.3-313 (association insurance) and § 38-33.3-303.5 (construction defect actions).
• Colorado Real Estate Commission, Contract to Buy and Sell Real Estate (Residential) (CBS1), § 7.3.5 — the association financial documents a seller must deliver, including the operating budget, annual financial statements with reserves, the most recent audit or review, and the reserve study. dre.colorado.gov
• Colorado Division of Real Estate, About the HOA Center. dre.colorado.gov