Buying a Condo
Buying a condominium isn’t just about buying a home; it’s about investing in a new lifestyle. The right home loan can give you access to a community and shared amenities unique to your condominium complex. CrossCountry Mortgage can help you navigate condo financing for those who prefer an urban lifestyle.
What are mortgage loans for condos?
These are loans aimed directly at those wishing to purchase a unit in a condominium complex. A condo is similar to an apartment, though in a condo you’ll actually own the interior of the unit while your condominium association will maintain the upkeep of the exterior.
How does financing a condo work?
CrossCountry Mortgage offers loans that can help you purchase a condo whether you’re using it as a primary residence, vacation home, or real estate investment property.
How does a mortgage for a condo work? Your loan will depend on your financial situation as well as the condo’s age, condition, and available amenities. CrossCountry Mortgage offers borrowers options with adjustable or fixed rates for added flexibility.
Condo HOA
When you move into a condo, you’re moving into a community governed by a condo association or homeowners association (HOA). You’ll pay a small set of membership dues, but in exchange, the HOA will be responsible for the upkeep of common areas and amenities as well as the cost of condo projects. It will also enforce rules and guidelines that vary between condo complexes.
Condo vs. co-op
Condos are similar to co-ops but with an important difference. In a co-op, the owner owns a portion or share of the entire building. In a condo, owners are responsible only for the interior of their individual units.
Warrantable vs. non-warrantable condos
CrossCountry Mortgage can provide financing for both warrantable and non-warrantable condos. Here’s an overview of each.
What is a warrantable condo?
A warrantable condo is one that’s eligible for a conventional loan. These condos must adhere to standards set by Fannie Mae and Freddie Mac to ensure that the loan is within reasonable risk. CrossCountry Mortgage can help you close on a warrantable condo within 21 days or less.
What is a non-warrantable condo?
Non-warrantable condos do not adhere to the standards set by Fannie Mae and Freddie Mac. As a result, these condos come with greater risk, and you may not have the same low down payment options of a conventional loan. But CrossCountry Mortgage can help you navigate the condo buying process and still receive financing for a non-warrantable condo.
Condo pros and cons
Is buying a condo right for you? Before you take out a mortgage for a condo, consider some of the pros and cons of this lifestyle.
Condo pros
Positively, condo owners gain the following advantages:
- The property maintenance is taken care of
- Condos offer amenities such as swimming pools, fitness center and community centers
- Condos are typically cheaper than buying a single-family home
- Conventional loans are available for condo buyers
- Condos can be used for second homes or investment properties
Additionally, lenders like CrossCountry Mortgage offer flexible financing options so you can find a loan that’s right for you.
Condo cons
On the other hand, condos aren’t for everyone. Drawbacks to condos include:
- Residents must pay HOA fees and respect the rules of the community
- Interest rates and monthly costs can be higher than a single-family home
- Selling your condo can be more challenging than selling a house
- Condos offer limited privacy compared to a single-family house
So while condos offer a lower upfront price, condo owners may find themselves paying higher interest rates and condo association fees. Still, this can be an acceptable trade-off for the amenities and lifestyle that come from owning a condo.
Condo financing requirements
CrossCountry Mortgage offers several options for condos. Here’s how to qualify for a condo using each loan type. (Note that USDA loans are not commonly used for condos since this program is reserved for homes in rural areas.)
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Conventional loans require a minimum credit score of 620 and a down payment of at least 3%.
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Backed by the Federal Housing Administration, FHA loans require a minimum down payment of 10% if your credit score is 500 or above. But if your credit score is 580 or higher, you can qualify with as little as a 3.5% down payment. FHA-approved condos are condos that can be financed with an FHA loan.
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Backed by the Department of Veterans Affairs, VA loans are exclusively reserved for active/former military personnel and their immediate families. No down payment is required, though you should aim for a credit score of 620 or higher for the best rates.
How to get a mortgage loan for a condo
Ready to move into your new condo? Just contact CrossCountry Mortgage today to start the process and let us help you achieve your dream of a downtown, urban lifestyle!
Condo financing FAQs
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Generally, yes; mortgage loans for condos can be more challenging than a loan for a single-family home. Thankfully, lenders like CrossCountry Mortgage offer multiple options to make condo ownership more accessible.
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Yes. Loans for condos typically have higher interest rates, though the initial purchase price is more affordable than buying a single-family home.
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Yes. FHA loans are available for condos as long as your credit score is 500 or above. If your credit score is 580 or above, you can purchase a condo with as little as a 3.5% down payment.
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Yes, you can refinance the mortgage used to finance your condo. Your lender may reexamine your condo’s condition and the condo association’s finances to ensure that refinancing is feasible.
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