CONDOS

Dreaming of condo living?

There important things to know when getting a mortgage on a condo versus a single family home. Remember, when a lender gives you money to purchase a home, they are evaluating both you as a buyer and the property as collateral for a loan.

Condos in Florida historically have a higher default rate than other types of homes. They also may become subject to an association lien if the unit owner doesn’t pay — making it more difficult for the lender to foreclose if needed. Because of this, lenders under Fannie Mae guidelines will evaluate the homeowner’s association and its budget. A down payment of 5% – 25% may be required.

Here’s what you need to know…

To buy a condominium with an FHA loan, it must already be on the FHA approved list: https://entp.hud.gov/idapp/html/condlook.cfm

To buy a condo with a Conventional loan, there are two options: Full Review or Limited Review. With full review, a buyer can put as little as 5% down and a detailed evaluation of the condo will be done.

With a limited review, a higher down payment (25% or more) is required. This type is much easier to qualify for.  The questionnaire for the condo association is just a few quick questions.

If a condo is listed on the Fannie Mae approved list, only 5% down is needed: https://www.fanniemae.com/content/datagrid/condo_pud/fl.pdf

 

When doing a 5% down Full Review condo, the most common qualifying items to look for are:

• Minimum 10% reserves
• Minimum 51% owner occupied or second home
• No one investor can own more than 10% of units
• Delinquent dues must be 15% or less

Qualifying for a condominium loan is different than for a single family home, and it is important to work with a qualified mortgage professional who can guide you through it.