Government run companies such as Fannie Mae consider loans on condos riskier than those in a single-family house. They often times add charges onto a home loan for the lender that will be transferred to the borrower.
Borrowers can run into several problems with getting a mortgage on condominium including strict standards and higher costs. First, the borrower must qualify in order to apply for the loan and then the condo association also has to qualify. However, the borrower has little to no control over the Association and therefore may have to choose a different condo altogether.
Condominium financing depends on the Association and the complex. Lenders typically want to see a higher concentration of owner occupants rather than renters and they prefer to see delinquency rates on condo fees lower as well.
Fannie Mae’s other requirements on condominiums state that more than half of the condo units must be owner occupied and no owner may own more than 10% of the units in the complex. No more than 15% of homeowners should be delinquent on their condominium fees or HOA dues and all amenities must be completed if the development is more than 12 months old.
The FHA has a little bit easier down payment requirements but they also require strict guidelines for the condo association. Condos that are not approved for the FHA or Fannie Mae financing are known as “unwarrantable” and there are very few options besides these two for condo buyers.
If you are looking for a condominium the first question you should ask the management company is if their complex is FHA or Fannie Mae approved. If not, this could be a deal breaker right off the bat.
So, there are differences between a condominium loan and a single-family house loan. Which works the best for you is really based on your existing finances and the complex you choose. For more information please contact me at any time. I would love to answer your questions and discuss other options for you if you are considering purchasing a condo in Panama City Beach Florida.