What You Should Know About Condo Mortgages
Mortgage requirements for condos can vary between FHA condo loans and conventional (Fannie Mae / Freddie Mac) condo loans. Unlike a single-family-residence (SFR) home loan, mortgage loans for condos are subject to some additional qualification requirements that pertain to the condominium project itself. Additional requirements are generally in place whether the property being financed is a Minnesota condo, a condo located in another state, a primary residence, or a second home. Regardless of the type of condo mortgage program you choose, your Finance of America Mortgage Advisor and mortgage processing team will work with the condo project to obtain the information necessary to determine eligibility, the requirements of which are summarized below.
The FHA (Federal Housing Administration) has an FHA approved condo list and requires that condos being financed with an FHA mortgage be on the approved list. Typically certifications must also be made that no investor owns over 10% of the units, that condo occupancy is at least 50% of the project, that no more than 15% of condo owners are not seriously delinquent on their Home Owner’s Association (HOA) dues and that there is no litigation against the project.
The VA (The US Department of Veteran’s Affairs) also has a VA approved condo list and requires that condos being financed with a VA mortgage be on the VA’s approved list.
If a conventional mortgage will finance the condo, the condo project must be “existing,” which simply means that all units and common areas must be completed and the HOA (Home Owners Association) turned over to the homeowners. Depending on how much a buyer is planning to put down on the condo, a “limited review” may be performed in which only verification that, A) there is no litigation against the project and B) one investor does not own more than 10% of the units, would be required. In cases where a limited approval is not received, the Condo Project Management would be required to complete a questionnaire that includes questions about occupancy percentage and delinquency of HOA dues.
For more information about Condo Mortgages and how condo approval guidelines compare across different programs, please contact your Finance of America Mortgage Advisor today.