A condominium, or condo, is one of the most prevalent forms of residence, especially among working professionals in urban areas and young couples embracing the joy of first-time homeownership.
Condo financing is generally similar to funding a single-family home. Getting a condo mortgage requires extra steps in underwriting, and some loan programs have specific rules. The same type of loans obtainable by single-family homebuyers is available to condo buyers, including:
Qualifying for a condo mortgage hinges mainly on whether the condo meets the lender's policies and the buyer's financial situation.
The lowest credit score and income you'll need will differ by the type of mortgage. For example, an FHA loan's minimum credit score for a loan is 580. But with a VA, USDA, or conventional loan, you may require a score of 620 or better to get approved.
A condo presents a riskier loan to a lender than a traditional house. Some lenders may demand higher rates for a condo loan to compensate for that added risk. The better your credit score, the better your interest rate is for condo loans. You'll want to shop around with various lenders to understand how condo mortgage rates compare. This is where we come in.
Condos have critical advantages over single-family homes, including lower price tags and fewer maintenance hassles. Condo loans are particularly designed to help potential home buyers facilitate the acquisition of condominium units. While they may come at higher interest rates (given added risk factors), they're also available in many familiar forms from the same lenders who may extend mortgage loans on single- or multifamily residences. Potential buyers in the market for a new condominium may wish to consider other similar home options, such as apartments.
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