Here in Houston, we have a unique situation. It is "condos" that look like Townhomes. It walks like a townhome, talks like a townhome, but its quacks like a condo. The property is listed on HAR.com(MLS) as a townhome, it looks like one. The contract is done on a 1-4 family residential contract. But on the tax record it shows a Condo. to know the exact answer, look up the property on the Harris County Appraisal District. And look under the "building type". Some genius came up with the idea that if you call townhomes, condos you can build more of them per lot. Per the County/City you can do this, since condos were meant to be built up. So they know there would be more condos since they are built on top of each other. Why this is a great idea and profitable to the builder, it can affect you since financing for Condos is much harder then for townhomes. How does this affect you?
Financing
If you are buying a townhome, you have nothing to worry about. There are no restrictions for them. But that is not true for condos. If you plan on buying your condo with a FHA loan, then the condo must be a FHA approved condo. You can find out if a condo is FHA approved. And if you want to check to see if a condo is VA approved for your VA loan, check out VA Condo.
So lets say you want to buy a condo with a conventional or it is not FHA/VA approved. Your minimum down payment will be 10% vs 3.5% for a FHA loan(or 0% for VA). And the condo must have a owner occupancy rate of 70%, this means that 70% of the condos are lived in by the owners and not rented. If you are putting a 20%+ down payment, then rules for the condo to be financed can be easier.
Homeowners Association aka HOA
Townhomes some times have yearly HOA fees. Condos always have HOA fees and many times it is a monthly fee. This fee is to cover the common areas(ex parking lot), garbage pickup, some utilities, etc and insurance for the exterior of the property. This fee you have to budget for and will also need insurance for the interior of your condo. When getting approved you need to know that this HOA fee is taken into consideration for your mortgage payment. This does not mean the HOA fee is in your payment, but is used for qualifying purposes. Long story this means you could be approved for a $200,000 townhome and NOT a $200,000 Condo.
When looking at Condos or Townhomes, make sure you know which you are looking at. And is the condo FHA or VA approved? Or will it get approved for a conventional. You will want to know all this before you make an offer. You do not want to find out at the last minute that your dream home is now a Condo that can not be financed.
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