Top 10 Rules to Financing a Condo

Financing a condominium can be a challenging task.  Getting a mortgage for a condo has many more requirements than purchasing a single family home.

Here are top 10 rules to financing a condo.

1. All units and common elements must be 100% complete.

2. 10% of units may not be owned by a single entity

3. 15% of units may not be delinquent over 30 days with HOA dues

4. Association cannot be involved in any pending litigation or lawsuit

5. Commercial space not to exceed 20%

6. Association must be turned over to HOA (Developer may not be in control)

7. 90% of units must be sold/conveyed to purchasers (This can vary down to 70%, but it will also depend on down payment usually 10% down payment or more)

8. No condotels, short term rentals, rental pools, etc.

9. May not be subject to additional phasing/add-ons

10. Any right of first refusal that adversely impacts the rights of the mortgagee to: foreclose, take title, accept a deed or assignment in lieu of foreclosure, or sell/lease a unit acquired by the mortgagee or its assignee

Please note that this list is not exhaustive but these are the first set or requirements that you will want to ensure are compliant.  The above rules are used when looking to get conventional financing.

If you think you want to purchase a condo using FHA financing you will also want to check and see if the condo is on the FHA approved project list go here https://entp.hud.gov/idapp/html/condlook.cfm

Type in the state and zip code and it will show you all the projects that are approved, as well as their expiration dates. 

 I hope this information is useful.

Should you need assistance with any of your real estate needs, please contact Supreme Manor Real Estate Services 773-881-9224.  

Have a Supreme Day!

Sheila M. Wilkinson-Sanders