If you are writing an offer on a Farmington Hills condo this summer, the most consequential number in the association packet is not the monthly HOA fee. It is the reserve balance, and starting January 4, 2027, Fannie Mae will care about it more than you do.
On March 18, 2026, Fannie Mae issued Lender Letter LL-2026-03. Buried in the update is a 15 percent reserve funding requirement that condominium associations must meet to keep buyers eligible for conventional financing. Associations can also comply by producing a reserve study and budgeting to the highest recommended allocation in that study. That change lands in a city where the condo market is genuinely varied. Redfin puts the Farmington Hills condo median list price at roughly $235,000 as of mid-2026, compared with a citywide median sale price of $350,000 over the three months ending April 2026. Buyers who pivot from single-family into condo product are stepping into a different set of transaction risks, and most of them do not know it yet.
The 10 Percent Floor Is Doing Less Work Than You Think
Michigan requires condominium associations to maintain a reserve fund under MCL 559.205, and Administrative Rule R 559.511 sets the minimum contribution at 10 percent of the annual budget. That is the floor. There is no statutory requirement to commission a reserve study, and there is no active state regulator that takes complaints against associations. House Bill 5019, which would require studies for associations with budgets over $20,000 or more than 20 units, has been introduced repeatedly but has not been enacted.
Ten percent is not a target. In Southeast Michigan, freeze-thaw cycling chews through roofs, asphalt drives, and exterior siding on a compressed timeline. An association that has treated the 10 percent minimum as a ceiling for two decades is almost certainly carrying deferred capital work that will surface as a special assessment. Fannie Mae's new 15 percent standard is essentially the lending industry acknowledging what Michigan condo counsel has been saying for years: the statutory floor does not match the physical reality of the buildings.
Farmington Hills Has The Deepest Condo Inventory In Oakland County — And The Oldest
The complexes are not interchangeable. Age, unit count, and structural type all drive different reserve exposure. A rough sketch of the market:
| Complex | Built | Typical Size | HOA Signal |
|---|---|---|---|
| Brookdale | 1964 | 480–700 sq ft, 1-bed | Heat and water in dues; ~$67K–$105K price band |
| Echo Valley | 1966 | 1,193–1,517 sq ft | Mid-century low-rise, aging envelope |
| Beechwood Hill | 1975 | ~1,150 sq ft | $274/month, includes grounds, snow, water |
| Crosswinds | early 1980s | 900–1,100 sq ft, 216 units | Pool, tennis, clubhouse in the common load |
| Botsford Commons | 1995–1997 | 1,200–1,700 sq ft | Median HOA ~$510/month, senior community |
| Fairways of Farmington Hills | 2002–2005 | 3-bed detached | Attached garages, private-road exposure |
| Hills of Franklin | 2025–2026 | 2,725+ sq ft detached | Robertson Homes new construction, $1.35M+ |
That range matters because Fannie Mae's 2026 update also expands the waiver of project review for condominium projects with 10 or fewer units, and retires the limited review process on August 3, 2026. Hills of Franklin, an eight-unit enclave, is on a different regulatory track than Crosswinds' 216 units. Buyers should know which track their target complex is on before writing an offer, because it determines what the lender will demand from the association before closing.
The One Thing New-Construction Buyers Get That Resale Buyers Don't
Michigan gives buyers of newly constructed condominium units a 9-business-day right to rescind the purchase agreement. Buyers of a resale unit get no equivalent statutory certificate and no rescission right. What resale buyers do get is a document review window written into most purchase agreements, typically 7 to 14 days, and that window is the entire buyer-side diligence process. Miss what is in the documents, and you own the problem.
This is the friction that catches Farmington Hills first-time buyers most often. They treat the condo document review the way they treated the home inspection on a rental they toured six months ago — a formality. It is not a formality. It is the only structural protection they have.
Here is what to request and what to read for during that window:
- The most recent reserve study, if one exists, plus the two prior annual budgets. If the association has never commissioned a study, that is a data point, not a dead end.
- The last three years of board meeting minutes. Look for the words "assessment," "roof," "asphalt," "insurance renewal," and "master policy."
- The current master insurance certificate. Michigan homeowner premiums rose sharply through 2024 and 2025, and master policies often exclude or limit ice-dam and gradual water damage.
- A written statement from the association about any pending or recently completed special assessment, plus the reserve fund balance as of the most recent budget.
- Delinquency rate on assessments. High delinquency is a leading indicator of budget stress, and Michigan associations absorb more bad debt because the state has no super-priority lien for unpaid dues.
- Any pending litigation involving the association. Fannie Mae's guidelines can render a project ineligible for conventional financing when certain litigation is disclosed.
If the seller's agent balks at producing any of these, that is your signal, not their inconvenience.
Which Farmington Hills Complexes Are Most Exposed To The 2027 Shift
The reserve rule does not hit every complex equally. The exposure profile stacks by age and common-element load. A 1960s low-rise like Brookdale carries an old roof, aging plumbing, shared corridors, and an indoor pool. A 1975 mid-density community like Beechwood Hill carries carports, common laundry, tennis courts, and a pool. A detached-condo product from the mid-2000s at the Fairways carries private roads and grounds maintenance, but the individual unit envelopes are newer and the reserve line items are lighter. New construction like Hills of Franklin is on the opposite end entirely.
For buyers, that translates to a simple sorting rule. The older the complex and the heavier the shared amenities, the more the January 2027 Fannie Mae standard should shape your offer strategy. Not because those complexes are bad places to live. Many of them are excellent, and the Farmington Hills Council of Homeowner Associations coordinates a real network of engaged boards across the city. The reason to sort is that a $220,000 two-bedroom in a well-run 1970s complex with a funded reserve is a very different asset from a $220,000 two-bedroom in a 1970s complex whose board has run at the 10 percent floor for a decade. Both look identical on the listing feed.
For sellers, the same rule cuts the other direction. If your association is under-reserved, your buyer pool will narrow the moment the new Fannie Mae standard binds. A reserve study commissioned now, and a board vote to fund toward the study's recommendation, is the single highest-leverage thing an association can do to protect resale values over the next 18 months.
FAQ
Does a low HOA fee mean the association is well run? Sometimes the opposite. A fee that has stayed flat for five years while insurance premiums, snow removal contracts, and asphalt costs have all risen is a fee that is being held artificially low. The reserve line is usually where the shortfall shows up first.
What if the complex has never had a reserve study? It is not disqualifying on its own. Michigan does not require one. But it means you cannot verify whether the 10 percent minimum is adequate for the actual condition of the buildings, and your lender may not be able to verify it either once the 2027 standard binds. Ask the board whether they plan to commission one.
Does the 2027 Fannie Mae rule apply to FHA and VA loans too? No. FHA and VA have their own condominium approval processes, which look at similar factors but on different timelines. If you are financing with FHA or VA, ask specifically whether your target complex is on the current approval list before you spend money on an inspection.
Is new construction like Hills of Franklin a safer path? Different risk profile, not necessarily safer. New-construction buyers get the 9-business-day rescission right and a fresh building envelope, but the reserve fund is being built from scratch and the developer controls the association until the transitional control date. Read the master deed carefully.
If you are weighing a Farmington Hills condo purchase or preparing to list one, the smart move right now is to pull the documents and read them with someone who has seen a hundred of these packets. Andrea Yakobe works Farmington Hills condos across every price band and can walk the association paperwork with you before you sign. Schedule a quick market consultation or book a showing today.
