Arlington Condo Reserve Studies for Smart Buyers

Thinking about buying a condo near a Metro stop in Arlington and wondering what those monthly fees really cover? You are not alone. In high-rise buildings, a lot rides on something called a reserve study, and it can shape everything from your condo fee to whether your mortgage gets approved.

In this guide, you will learn what a reserve study is, how it affects your monthly costs, how lenders evaluate buildings, and exactly which documents to request before you write an offer. You will also see what is typical for Arlington high-rises and which red flags to watch for. Let’s dive in.

What a reserve study is

A reserve study is a planning tool your condominium association uses to prepare for big future expenses. It lists the major shared components of the building, estimates how long each has before it needs repair or replacement, and projects the cost and timing of those projects. The study then recommends a funding plan so the association can save steadily instead of relying on surprise special assessments.

At a high level, a professional reserve study includes:

• Component inventory for major systems like roofs, façades, elevators, HVAC plants, windows, parking garages, pools, paving, and mechanicals.
• Remaining useful life and replacement cost estimates for each component.
• A funding schedule showing projected expenditures and the recommended annual reserve contribution.
• A funding model that explains the approach, such as cash-flow or straight-line/component funding.
• An executive summary with a key metric called percent funded.

Reserve studies are typically prepared by engineers or experienced reserve specialists. Best practice is to do a full study, then update it regularly: a site-visit update every few years and a lighter financial update annually.

Key terms to know

• Reserve balance: the cash currently in the reserve account.
• Fully funded balance: the target amount the study recommends at a point in time to be on track for future needs.
• Percent funded: current reserve balance divided by the fully funded balance, expressed as a percentage. A higher percent funded generally indicates lower risk of surprise assessments.
• Annual reserve contribution: the portion of the association’s budget that gets saved each year.

How reserve studies affect your monthly fee

Your monthly condo fee includes operating expenses plus a reserve contribution. When a reserve study recommends higher contributions to prepare for upcoming projects, monthly fees often rise gradually to meet the plan. A clear, current study helps the board plan increases in a predictable way.

Special assessments and shortfalls

If the association is underfunded or an unexpected repair hits, the board has a few options: increase monthly dues, levy a one-time special assessment, or borrow funds secured by the association and raise dues to cover the loan.

Here is a simple example to illustrate owner impact. Imagine a building needs $600,000 for façade repairs and there are 200 units. That equals $3,000 per unit. The board might:

• Levy a one-time $3,000 assessment; or
• Borrow $600,000 and add a smaller monthly charge for loan payments; or
• Raise dues over several years, such as about $70 per month for 36 months, which totals roughly $2,520 per unit.

Funding approaches and what they mean for you

• Cash-flow funding smooths contributions over time and can reduce the chance of large special assessments.
• Baseline or minimum funding keeps contributions lower in the short term, which may raise the risk of future assessments.
• Borrowing can spread costs out but adds interest and can influence some lenders’ views of the building.

What to scan in the documents

When you review a reserve study and budget, look for:

• A clear reserve contribution line item in the budget.
• The current reserve balance and the percent funded.
• The list of large projects in the next 1 to 5 years and how the board plans to fund them.
• Any notices about special assessments or association loans.

How lenders view condo reserves

Lenders and mortgage investors look at a condo building’s financial health because it affects project stability and your ability to repay. Adequate reserves, a current study, and manageable capital plans lower project risk. If the project shows signs of financial stress, some loans can be delayed or denied.

Common review items include reserve adequacy, special assessments, owner-occupancy ratio, delinquency rates, and any material litigation. Many checklists refer to a general benchmark of reserves equal to about 10 percent of the annual budget for short-term liquidity. This is a guideline rather than a universal rule, and the exact standards depend on the loan program and investor.

Lenders also pay attention to how current the reserve study is. Many require a study no older than 2 to 3 years, and they may request an update if it is older.

Agency programs and approvals

• Conventional loans sold to Fannie Mae or Freddie Mac use project-review guidelines that consider reserve funding and project-level risks.
• FHA loans require the condominium project to be approved through the FHA process. Reviewers look at reserve funding and documentation.
• VA loans also require project approval on the VA roster.

Your lender must confirm the latest program rules and whether the building is warrantable or on their approved list. Because agency standards can change, ask your loan officer to specify in writing what documents they need for the condo review and how they evaluate reserve levels and special assessments.

Practical steps to keep financing on track

• Ask your lender early if the building is on their approved or warrantable list.
• Provide the reserve study and current financials promptly so the project review can begin.
• If a special assessment is planned, ask whether it must be paid at closing or if you can assume the remaining payments. Policies vary by lender.

Arlington high-rise realities near Metro

Arlington has many mid-century and late 20th-century towers clustered around Metro corridors. These buildings often share predictable capital needs, including elevator modernizations, façade and concrete repairs, roof and window replacements, parking garage work, and major mechanical or HVAC upgrades. A solid reserve study should show these items, with timing and funding.

For major exterior or structural work, Arlington County may require building permits and inspections. Boards typically discuss those projects and timelines in meeting minutes and owner notices. Permit review and contractor scheduling can affect start dates and costs, so it is helpful to confirm timing when you review the association’s plans.

If a building has already completed a big cycle of rehabilitation, you may see the financial impact reflected in recent dues increases or assessments. If the cycle is coming up, you will want to see a clear plan in the reserve study and budget to fund it.

Local lenders and brokers who work regularly with Arlington condos can be helpful. They know which project traits often trigger extra scrutiny and how to structure the file to move through underwriting smoothly.

Buyer checklist before you offer

Ask for these documents as early as you can, ideally before you submit an offer or during your condo-document review period:

• Most recent reserve study and any updates, with the date and whether there was a site visit.
• Current-year budget and the prior two years’ budgets, showing the reserve contribution line item.
• Current reserve balance, via a bank statement or a balance sheet.
• Financial statements for the last 2 to 3 years. Audited or reviewed statements are best if available.
• Board meeting minutes for the last 6 to 12 months.
• Notices or resolutions about any current or planned special assessments.
• The reserve-funding policy and capital plan if separate from the study.
• A 5 to 10-year list of planned capital projects with cost estimates.
• Insurance certificate for the master policy and the fidelity bond, with deductible details.
• Declaration, bylaws, rules and regulations, and any amendments that affect assessments.
• Any available condominium project approval letters or statuses for FHA, VA, or conventional programs.
• Litigation disclosures and summaries of pending or threatened suits that could affect finances.
• Management contract and any third-party service contracts for major systems.
• Parking, storage, or other reserved-use agreements with potential costs.

Smart questions to ask

• When was the last reserve study done and by whom?
• What is the current percent funded and reserve balance?
• Which capital projects are planned in the next 1 to 5 years, and how will they be funded?
• Are any special assessments under consideration?
• What are owner-occupancy and delinquency levels?
• Is there any material litigation that could impact cash flow?

Red flags that warrant caution

• No recent reserve study, or a study older than 3 to 5 years that was not prepared by a qualified specialist.
• Very low percent funded, for example below 20 to 30 percent, without a credible plan to improve it.
• Large near-term projects with no identified funding source.
• Repeated or recent special assessments, or frequent emergency borrowing.
• Rising assessment delinquencies or material litigation.
• A project that does not meet lender approval standards, which can limit financing options.

Timing and process tips

• Build time into your offer for condo-document review and lender project approval.
• Share documents with your lender early so underwriting can evaluate the building.
• If you anticipate project-related risk, consider a contingency tied to condo-doc review or project approval, consistent with your contract and local practices.

Make a confident offer

When you understand the reserve study, you understand the building’s roadmap. You can see what work is coming, how it will be funded, and how that will affect your monthly costs and loan options. That clarity helps you write a strong, confident offer in a competitive Arlington market.

If you want a second set of eyes on the documents or guidance on lender expectations for Arlington condos near Metro, our team can help you navigate the details and protect your interests. Reach out to the Carmen Fontecilla Group to request a personalized market consultation.

FAQs

What is “percent funded” in a condo reserve study?

• Percent funded is the reserve balance divided by the fully funded target, shown as a percentage, and a higher percentage generally indicates lower risk of special assessments.

How often should a condo update its reserve study?

• A full study with periodic site-visit updates every 3 to 5 years is a common best practice, with lighter financial updates annually and many lenders preferring studies no older than 2 to 3 years.

How do special assessments typically work in Arlington condos?

• When reserves are short or a major repair arises, the board may levy a one-time special assessment, increase dues, or borrow and add a monthly charge to cover debt service, as allowed by governing documents.

Will condo reserves affect my mortgage approval?

• Yes, lenders review reserve adequacy, special assessments, delinquency rates, and litigation, and some programs require the building to meet approval standards before they will finance your loan.

Can I use FHA or VA financing for an Arlington condo?

• You can if the condominium project meets FHA or VA approval requirements, so ask your lender early to confirm the building’s status and the documents needed for review.

Which documents should I request before making an offer?

• Ask for the latest reserve study, current reserve balance, last 3 years of budgets and financials, board minutes, special-assessment notices, insurance certificate, governing documents, project-approval status, and litigation disclosures.