Do you and your condo complex qualify for financing?

Condominium financing is very similar to obtaining financing for a single family home with the biggest difference being that not only does the borrower need to qualify for the mortgage, but the condominium complex must qualify as well.

Qualifying your condo community

There are different lending guidelines for established complexes versus new complexes, so it is best to check with a mortgage professional on the updated requirements, as these guidelines can change. Some of the factors that a lender will evaluate in determining if the condo is approved for financing are:

1. Number of owner-occupied/2nd home units versus investment units

2. Adequate insurance coverage maintained by the association and enough funds to cover the deductible

3. Annual budget must have 10% set aside for capital reserves

4. Condo documents must have the correct language protecting the mortgagee's rights

5. New complexes must have a minimum number of units sold

It is actually beneficial to condo buyers that the lender is reviewing the above requirements, as it will help to protect your investment and future interests as well.

Qualifying yourself

The mortgage requirements to finance a condominium are no different than qualifying for financing to purchase a single family home.   The lenders will evaluate your credit score, debt to income ratios and the amount of your down payment.   If it will be your primary residence, FHA financing allows you to purchase with as little as 3.5% down.   Second home purchases require a minimum of 10% down and investment purchases require 25% down.   Private mortgage insurance will be required on any purchases with less than 20% down.   It is best to discuss your personal financial profile with a mortgage professional who can evaluate your information in order to advise you on the best products and financing options that are available.
- Information for this page provided by MaryannTaormina at Mortgage Master, Inc.
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