Condo fees are calculated based on the total costs and expenses for maintaining and managing the entire condominium complex, and each owner of a condo unit will pay a portion of the total amount depending on the portion that the unit makes up of the entire complex.
Can you get a mortgage to buy a condo?
Fannie Mae, Freddie Mac and the FHA all have certain standards that condominium developments and their homeowners’ associations must meet before they will approve a mortgage to buy a unit there.
Why are condo fees so high?
Condo fees are used to pay for heat and electricity in the common areas. Besides heat and electricity the condo building needs to be managed, the snow needs to be shoveled, the landscaping needs to be kept up, the hallways need cleaning, the elevator needs maintenance, the building needs insurance and so on.
What is the life of a condo building?
It will usually last up to about 10 years, after which it will require maintenance and replacement by the time it reaches 15 to 18 years.
Do you need conventional financing for a condo?
If the condo is not on the list, the borrower will need to seek conventional financing.
What makes a condo mortgage different from other mortgages?
What makes a condo mortgage different is the underwriting process. During underwriting, lenders review not only your finances but also the financial health of the condo association for the property you want to buy. The bank will consider factors from the condo association such as:
Can you get a loan for a condominium?
Because of these variables, not every condominium project qualifies for a loan. Your intended use of the condo can affect what kind of financing you’ll get. Whether your condo will be your primary residence, vacation home, or investment property will determine how much you need to put down.
How does a Fannie Mae condo loan work?
Both Fannie Mae and Freddie Mac have similar eligibility guidelines for condo financing: No more than 15% of the units in the condo project can be 60 days or more late on HOA dues. Lenders are required to review the HOA budget; at least 10% of the condo budget must be held back for maintenance.
