September 9th, 2025 8:56 PM by Sam Kader NMLS# 130505
Beginning June 1, 2024, mortgage lenders adopted a new guideline for property insurance requirements. In the past, many lenders accepted a Replacement Cost Endorsement (RCE) attached to a homeowner’s or HOA insurance policy as sufficient proof that a property was insured for its full replacement value. That is no longer the case.
As of June 1, 2024, a Replacement Cost Endorsement by itself is not sufficient documentation. Lenders now require additional proof that the insurance coverage amount meets or exceeds the property’s full replacement cost value, including common elements for condominium and HOA properties.
This change was made to ensure homes are not underinsured. If a major loss were to occur, both homeowners and lenders need to be confident the policy provides enough coverage to rebuild the property.
Instead of relying only on the RCE, lenders will require one of the following forms of documentation:
This rule is designed to protect you. An endorsement alone doesn’t always prove that the actual policy limits are enough to cover the full cost of rebuilding a home. By requiring stronger verification, lenders help reduce the risk of being underinsured in the event of fire, storm damage, or another covered loss.
For borrowers, this means an extra step in the loan process—but one that ensures your property is properly protected. For HOAs and condo owners, it’s especially important to work with your insurance agent early so that documentation is ready when your lender requests it.
If you’re in the process of buying or refinancing, be proactive:
By addressing this early, you’ll avoid last-minute delays in underwriting and keep your closing timeline on track.
Important Note: This post is for informational purposes only and not a commitment to lend. Insurance requirements may vary by lender, loan program, or property type. Always confirm specific documentation needs with your loan officer and insurance provider.