Buying a condo? The building matters too.

What's different about financing a condo

With a house, the approval is mostly about you and the property. With a condo, the lender also reviews the homeowners association (HOA): its budget, insurance and how the building is run. Depending on the loan program, the project may need to meet certain guidelines before it can be financed.

What typically gets reviewed

• HOA questionnaire. The association fills out a form about the building. There's often a fee, and it can take a little time, so we order it early.
• Budget and reserves. Lenders want to see the HOA is setting money aside for future repairs.
• Owner-occupancy and investor mix. Some programs look at how many units are owner-occupied or rented out.
• Delinquent dues. A high share of owners behind on HOA dues can be a red flag.
• Litigation and special assessments. Lawsuits involving the HOA, or big upcoming assessments, can affect financing.
• Master insurance. The building's policy has to meet the loan's requirements. You'll typically also need your own HO-6 policy for the inside of your unit.
• Single-entity ownership and commercial space. Too many units owned by one person or company, or a lot of commercial space, can matter.

Warrantable vs. non-warrantable

A warrantable condo meets conventional (Fannie Mae and Freddie Mac) guidelines, which usually means more loan options. A non-warrantable condo doesn't meet one or more of those guidelines. That doesn't automatically mean you can't buy it. There may be portfolio or non-QM options, but they often come with a larger down payment and different pricing.

FHA and VA condos

FHA and VA loans have their own condo approval rules. Some projects are already on the FHA or VA approved list. If a project isn't, there may be options like FHA single-unit approval, depending on the building. I'll check before you get too far in.

Don't forget the HOA dues

Your monthly HOA dues count in your debt-to-income ratio, just like your mortgage payment. A $350 HOA fee can change how much you qualify for, so plug it into the mortgage calculator before you shop.

Condotels and short-term rentals

Buildings that operate like hotels (front desk, rental programs, daily rentals) usually need specialty financing. If you're eyeing a beach condo you plan to rent out, tell me up front so we pick the right loan from day one.