Conventional Mortgage Condo Requirements | Condo Options
Looking for conventional mortgage condo requirements? This article will go over:
- Fannie Mae condo requirements.
- Freddie Mac condo requirements.
- And condos that do not meet Fannie Mae and Freddie Mac requirements.
Understanding guidelines for condos will prevent any delay in condo financing.
Fannie Mae Condo Requirements
Fannie Mae has eligibility requirements when it comes to condos, co-op, and planned unit developments (PUD). When determining a project eligibility risk, factors for risks are distinct when determining if the project meets the requirements.
During the mortgage process, a condominium project questionnaire is completed by the homeowners’ association or management company to streamline the process. This is not a borrower’s duty to determine if a project meets Fannie Mae’s eligibility requirements, but should be considered to prevent any unforeseen circumstances.
Minimum Down Payment
The minimum down payment on a condo is 3% for primary residences and grants are available to borrowers who qualify. The minimum down payment for a second home is 10% and 15% for an investment property.
Freddie Mac Condo Requirements
Freddie Mac has condoominium requirements similar to Fannie Mae. The minimum down payment is 3% made available through the HomeOne and Home Possible program with grants available. When choosing an option and determining condominium requirements, a borrower can ask either if Fannie Mae or Freddie Mac has favorable terms.
Eligibility for Condos
In order to get pre-approved for a condo, a borrower should reach out to a Loan Originator and ask for a list of documents required. The Loan Originator will review all documents and run the Automated Underwriting System (AUS) to determine eligibility. AUS is run during the pre-approval process that analyzes credit, capacity, and collateral.
In some cases, a Loan Originator can be mistaken when it comes to condo financing. A loan can get denied because of a mortgage company not being able finance condos outside Fannie Mae condo requirements and Freddie Mac condo requirements.
Other Types of Financing for Condos
FHA condo financing:
- Project have to be FHA-approved.
- 3.5% minimum down payment with grants available.
Condotel and non-warrantable condo financing:
- Financed through wholesale portfolio lending.
- Not all lenders are willing to finance these types of properties.