Condo Mortgage Options | Condo Mortgage Down Payment
There are a variety of condo mortgage loans and understanding requirements will help with finding financing. Home owners associations make and enforce rules and often there are agency requirements – take for example the FHA condo approval process. Knowing condo mortgage down payment options and if a condo is approved for specific financing is important before searching for a condo.
Traditional Loans – Condo Mortgage Down Payment
The FHA condo mortgage down payment is 3.5% for a FICO credit score of 580 or higher. FICO credit score under 580 require 10% down. 3% and 4% grants are available with a FHA condo approval with a minimum FICO credit score of 620. FHA loans are only for primary residences.
Conventional condo mortgage down payment is 3% for primary residences. Conventional grants are available at 2%, 4%, 5% and all condo projects need to follow agency guidelines. Through Fannie Mae and Freddie Mac, second homes require a minimum required investment of 10% and investment properties require 15%.
The VA condo mortgage down payment is 0%. The VA has a search tool that lists condos status to see if they are eligible for VA financing. It is very common for a mortgage company to have a VA lender overlay. For example, some lenders require a minimum FICO credit score of 600, 620, or 640 or cap debt-to-income ratios.
FHA Condo Approval Process
A condo mortgage loan for FHA loans must be:
- Primarily residential
- Have at least two dwellings
- Can be detached or semi-detached
- Row house, walk up, mid-rise, and high-rise
The HUD makes this easy to determine if a property by searching their database and finding the FHA condo approval. This will be a major factor when determining if the condominium project is approved. The search is as easy as going to the HUD’s condominium search page and checking the status of the project.
Condotel and Non-Warrantable
Financing for projects that do not meet Fannie Mae or Freddie Mac’s special requirements are available through condotel financing or a non-warrantable condo loan. Often, mortgage companies say they have financing a condo, but later find out that they cannot finance the property due to their internal guidelines. These loans are financed through wholesale portfolio lending or non-qm loans.
Even though condo mortgage down payment options are spelled out, the eligibility will be determined by the Automated Underwriting System (AUS). Loan Originators at Nationwide Mortgage & Realty, LLC have access to AUS and can determine your eligibility any day of the week. They can also help with determining if a condominium project is approved.