On March 18, 2026, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will no longer require full replacement cost coverage on roofs for mortgages they back. Lenders can now accept homeowners policies with Actual Cash Value (ACV) roof coverage instead.
For most of the country, this is a moderate policy tweak. For Florida, it's a significant shift — one that touches insurance premiums, real estate closings, and the state's long battle with roofing fraud.
Read the full FHFA announcement →Previously, Fannie Mae and Freddie Mac required homeowners with conforming mortgages to carry full replacement cost coverage on their roof. That requirement has been removed. Homeowners can now carry ACV coverage on the roof only — the rest of the home still requires replacement cost coverage.
ACV vs. Replacement Cost on a Roof: What's the Difference?
These two terms determine how much an insurance company pays when a roof is damaged or destroyed. The difference is straightforward, but the dollar gap is enormous — especially on older roofs. (For a deeper dive on ACV vs. RC across your entire policy, see our full ACV vs. Replacement Cost guide.)
The depreciated value of the roof at the time of the loss. A 15-year-old roof that costs $25,000 to replace might only pay out $8,000–$12,000.
The full cost to replace the roof with materials of like kind and quality at today's prices, regardless of the roof's age.
Replacement Cost − Depreciation = Payout
Full Replacement Cost = Payout
Lower premiums. The insurer's exposure on an older roof is significantly reduced.
Higher premiums. The insurer is on the hook for a full new roof regardless of the current roof's condition.
Not accepted by Fannie/Freddie. Lenders could reject the policy at closing, stalling or killing the deal.
Still accepted. Nothing changed for RC coverage — it remains the more comprehensive option.
How Depreciation Works on a Florida Roof
Roof depreciation in Florida is aggressive. Heat, UV exposure, humidity, and hurricane-season storms wear roofs down faster than in most other states. Here's what ACV looks like on a $25,000 shingle roof over time:
ACV of a $25,000 Shingle Roof Over Time
How depreciation reduces your ACV payout in Florida
Based on typical 5% annual depreciation for asphalt shingle roofs in Florida's climate
On a 15-year-old roof, the gap between an ACV payout and a full replacement is $17,500. That's the tradeoff: lower premiums now, but substantially less coverage when a claim happens on an aging roof.
Same Hurricane, Different Payouts
A hurricane damages two identical homes in Fort Lauderdale. Both have $25,000 replacement cost roofs that are 12 years old. Here's how the claims compare:
ACV Roof Coverage
The insurer calculates the depreciated value of the 12-year-old roof and pays accordingly.
− 12 years depreciation (~60%): $15,000
ACV of roof: $10,000
− $2,500 deductible
Insurance payout: $7,500
The homeowner receives $7,500 but still needs a $25,000 roof. The remaining $17,500 comes out of pocket or requires financing.
Replacement Cost Roof Coverage
The insurer pays the full cost to replace the roof, regardless of its age.
− $2,500 deductible
Insurance payout: $22,500
The homeowner receives $22,500 — enough to cover a full roof replacement minus the deductible.
Same storm. Same roof. Same damage.
Difference: $15,000
Who This Impacts in Florida
Lower Premiums, Less Roof Coverage
Florida homeowners with conforming mortgages can now opt for ACV roof coverage without running into issues with their lender. This typically lowers annual premiums. The tradeoff is a lower payout on roof claims — a significant consideration in a state where roof damage is the most common homeowners claim.
Fewer Insurance Roadblocks at Closing
Before this change, homes with ACV roof policies could stall at closing because the lender's insurance requirements didn't match the policy. This was especially common with older homes where full RC roof coverage was expensive or difficult to obtain. Removing the requirement eliminates that friction point.
More Options in a Tight Market
Florida's property insurance market has seen carriers exit or restrict coverage in recent years. Allowing ACV on roofs gives insurers more flexibility in what they offer, potentially expanding the number of carriers willing to write policies in the state.
Does This Address Florida's Roofing Fraud Problem?
Florida has dealt with widespread roofing fraud for years. The typical scheme: a contractor goes door-to-door after a storm (or even before one), convinces homeowners to sign an Assignment of Benefits (AOB), files an inflated insurance claim for a full roof replacement, and pockets the difference.
This fraud was fueled in part by replacement cost coverage. When an insurer is required to pay the full cost of a brand-new roof regardless of the existing roof's age or condition, the potential payout on each claim is high — and that high payout is what attracted bad actors.
Florida already took steps to address this:
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2022
SB 2-A: Florida's Insurance Reform
Eliminated one-way attorney fees in property insurance lawsuits and restricted AOB abuse. This was the largest single reform targeting roofing fraud in the state.
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2023
Florida Carriers Introduce ACV Roof Endorsements
Many Florida insurers began offering ACV roof endorsements at lower premiums, particularly for roofs over 10 years old. However, homeowners with Fannie/Freddie-backed mortgages often couldn't use them because of the lender requirement.
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2026
FHFA Removes Lender Requirement
Fannie Mae and Freddie Mac drop the replacement cost roof requirement. Homeowners with conforming mortgages can now carry ACV roof coverage without lender conflicts.
ACV roof coverage reduces the financial incentive behind roofing fraud. When a 15-year-old roof only pays out $7,500 instead of $25,000, the scheme becomes far less profitable for fraudulent contractors. Combined with Florida's 2022 AOB reforms, this shift removes another piece of the financial structure that made roofing fraud so lucrative in the state.
That said, ACV coverage doesn't eliminate fraud — it reduces the payout that makes fraud attractive. Inflated damage estimates, staged losses, and contractor kickbacks can still occur regardless of the settlement method.
What Didn't Change
This FHFA announcement is specifically about roof coverage only. Several things remain the same:
- The rest of your home still requires replacement cost. Fannie and Freddie only removed the roof-specific requirement. Coverage A (Dwelling) and Coverage C (Personal Property) replacement cost requirements remain.
- Your lender still requires homeowners insurance. The requirement for insurance itself hasn't changed — just the required settlement type on the roof.
- Flood insurance requirements are unaffected. If your home is in a FEMA flood zone with a federally-backed mortgage, you still need flood insurance.
- Private mortgage holders set their own rules. This change applies to Fannie Mae and Freddie Mac conforming loans. Lenders outside the GSE system may still require full RC on roofs.
The Bottom Line
Fannie Mae and Freddie Mac no longer require replacement cost coverage on roofs. Here's the core tradeoff:
ACV Roof Coverage
Lower premiums. Payout is based on the roof's depreciated value — the older the roof, the less the payout. On a 15-year-old roof, that gap can be $15,000+.
Replacement Cost Roof Coverage
Higher premiums. Payout covers the full cost of a new roof regardless of age. More coverage, but more expensive — and the coverage that fueled Florida's roofing fraud problem.
For a broader look at how ACV and replacement cost apply across your entire policy — not just the roof — see our full ACV vs. Replacement Cost breakdown.
Read the full FHFA press release →Related articles: