Condo Financing

by Arshpreet
(Oxnard, California USA)

Ask Kate about Condo Financing: Hi Kate, I just came to know about your websites. Our offer got accepted for a detached condo but it's really a house. It is the builder's fault that it is listed as a condo.

Arshpreet continues... I don't know why he titled them as condos. They have 4 bedrooms and are 2300 sq ft. Our loan is FHA. Can we still buy it? Please let me know by afternoon. If we can I will really appreciate it.

Kate Answers: Condo Financing

Dear Arshpreet,

The type of property (condominium vs single family dwelling) is not determined by size or whether structures are attached or detached.

A few years ago, it was easier to tell visually if a property was going to be classified as a condo or house. But as building styles changed, we learned to ask our Realtors about the type of property early on during the process -- before we ordered appraisals or submitted the mortgage for approval.

Condo Financing vs. Single Family Financing

Here's why a lender needs to know this. When a home buyer purchases a condominium, additional layers are added to the approval process. Not only does the credit package and property appraisal need the stamp of approval, so also does the Home Owners Association (HOA).

And this is the rub you are experiencing.

Furthermore, in addition to Home Owners Association approval, your debt ratios need to incorporate the monthly HOA fees which aren't calculated when buying single family houses.

FHA And Condo Financing

FHA makes it even more complicated because their condominium approval process can be more stringent than many conventional programs.

Conferencing The Mortgage Lender, Real Estate Agent And Builder

The bottom line is this. Condo financing is different from single family residence financing.

Detached housing can be condominiums and attached housing can be single family dwellings. It all depends on how the builder has set it up. No one can tell visually.

This very scenario highlights the importance of Realtors and lenders working together as a team. My advice is to schedule a conference call between you, the mortgage professional, your Realtor, and the builder. Find out what the lender needs in order to approve the condominium.

The builder and Realtor need to be party to this conversation to know what data your mortgage lender requires to approve your home loan.

I don't understand why the building type was overlooked and not caught until the 11th hour. You deserve answers. But most of all you deserve for the parties involved to come together and work as a team so you can buy your home.

Shopping For Mortgage Lenders And Realtors

Go here for my tips on finding a real estate agent. Since home buyers spend weeks and sometimes even months with their Realtors, selecting a real estate agent is deserving of strategy.

Shopping for the best mortgage lenders? Get my inside perspective with these 8 simple techniques to guide you through the selection process.

Best Wishes,



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