Condominium Mortgage Guidelines On Down Payment And Closing Costs

This BLOG On Condominium Mortgage Guidelines On Down Payment And Closing Costs Was PUBLISHED On February 28th, 2019

Condominiums are becoming more and more popular for home buyers.

  • This holds especially true for millennials and senior home buyers
  • Condominium Mortgage Guidelines are tougher than single-family homes
  • Lenders consider condos riskier investments than single-family homes
  • There are more loan level pricing adjustments on condos
  • Borrowers who only qualify for FHA Loans can only purchase condos in a HUD Approved Condo Complex
  • Government and Conventional Loans only allow warrantable condos

Gustan Cho Associates have special non-warrantable condo financing loan programs.

Difference Between Warrantable Versus Non-Warrantable Condos

The difference between warrantable versus non-warrantable condos is to be classified as warrantable the condo complex needs to be 51% or more owner-occupant.

  • You cannot tell the difference between warrantable versus non-warrantable condominiums just from looking at it
  • The main difference is due to ownership
  • If a condo project is 51% or more non-owner occupied, it is then classified as a non-warrantable condo project
  • Condo buyers cannot qualify for government and/or conventional loans on non-warrantable condos
  • Needs to be warrantable

However, Gustan Cho Associates at Loan Cabin Inc. has special non-warrantable condo mortgage loans for condo buyers.

Types Of Condominium Mortgage Guidelines

There is no one-set of Condominium Mortgage Guidelines.

  • Every loan program has its own Condominium Mortgage Guidelines
  • We will cover FHA, VA, and Conventional Condominium Mortgage Guidelines on this blog since these loan programs have the least down payment requirements
  • FHA Loans is one of the most popular loans in the United States
  • However, to qualify for a 3.5% down payment condominium purchase loan, the condo complex needs to be HUD Condo Approved
  • FHA Spot Loans has been discontinued years ago

When it comes to Condominium Mortgage Guidelines, borrowers need to be fully qualified and the condo complex needs to qualify as well.

Government And Conventional Condominium Mortgage Guidelines

HUD requires 3.5% down payment on condominium purchase FHA Loans.

  • Minimum credit scores required on FHA Loans is 580 FICO
  • Borrowers can qualify for FHA Loans on condominium purchases with under 580 credit scores but 10% down payment is required
  • FHA Loans are for owner-occupant primary loans only
  • Fannie Mae and Freddie Mac require 3% to 5% down payment on condominium purchases
  • Condos as second homes require 10% down payment
  • Investment homes on condominiums require 15% down payment on conventional loans
  • Minimum credit score requirements are 620 FICO to qualify for conventional loans
  • Borrowers can purchase condos with VA Loans. Condo complexes need to be VA approved
  • The Department of Veterans Affairs has a search tool that lists approved condominium complexes

Gustan Cho Associates at Loan Cabin Inc. does not have a minimum credit score or debt to income ratio requirement on VA Loans.

Closing Costs On Condominiums

All condo mortgage loans require closing costs. Closing costs vary depending on the condo complex, city, county, state. Closing costs vary. Closing costs can be covered either by sellers concessions and/or lender credit. FHA allows up to 6% of sellers concessions by sellers for buyers closing costs. VA allows 4% sellers concessions for buyers closing costs. Fannie Mae and/or Freddie Mac allows 3% sellers concessions on primary condos and 2% on investment properties.

Condotel And Non-Warrantable Condominium Mortgage Guidelines

Gustan Cho Associates at Loan Cabin Inc. offers condotel and non-warrantable condo loans. 20% down payment is required on non-warrantable condos. 25% down payment is required on condotel financing. Minimum 500 square feet is required. Need a fully functional kitchen with at least one bedroom. The minimum loan amount is $100,000. Maximum loan size is $3,000,000. One year’s reserves of PITI required on the subject purchase condo and any existing real estate holdings.

Borrowers who need to qualify for warrantable and/or non-warrantable condos, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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