Buying a Condo? Here's what you need to know

Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141

Buying a Condo?  Here's what you need to know



     In putting together a series on buying a condo with mortgage financing, I buying a condoalready dove into some of the more complicated property types, transactions, and potential pitfalls - those involved with non-warrantable condos & condotels.


     We skipped over the more basic, but also very important, information that anyone buying a condo of any type needs to look out for.  Buying a condo is similar to buying a single family home in many ways.  Same loan application, same documentation needed from the borrower.  Where things differ most is how a lender analyzes the property. 



     First and foremost, condo buyers using mortgage financing need to make sure they're working with a mortgage professional that is familiar and experienced with condo lending.  An experienced condo lender will do the following:


- Send in a condo questionnaire AT THE BEGINNING of the buying process.  I like to get a questionnaire done as early as possible to ensure a condo is warrantable and able to get financing under conventional or FHA guidelines.  If not, we need to look at non-warrantable condo lenders and guidelines(see the link above).


- Include all condo costs into estimates.  This includes the homeowners association fee and any capital contributions.


- Obtain the condominium's insurance policy up front.  Since condo owners generally only need insurance similar to a renters policy, it's up to the condo association to maintain acceptable insurance.  Finding out there's not enough insurance late in the game can cause problems.



     Buyers who would like to purchase a condo with mortgage financing need to keep the following in mind:


- What do your HOA fees cover?  What don't they cover? 


- When are HOA fees due?  Monthly?  Quarterly?


- Will there be a capital contribution fee on top of your standard closing costs?


-  Is the HOA in good shape financially and legally?  Litigation or lack of reserves (especially in incomplete projects) can cause delays or failure to obtain conventional financing.



     Using a lender &  a real estate agent that have experience with condominium sales will ensure a buyer notices no difference in the buying process from the purchase of a single family home.  On the back end and behind the scenes, there are differences that can make or break a deal and change financing terms, but a good lender and real estate agent will make sure there are no surprises, and make sure you know everything to expect going into your condo purchase.


Interested in learning more about condos and condo financing?  Check out the other articles in our condo series:

The difference between warrantable & non-warrantable condos

Financing for Condotels


Interested in buying a condo and need mortgage financing?  Use our purchase assistant to discover your financing options.



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Sharon Paxson
Compass - Newport Beach, CA
Newport Beach Real Estate

Hi John - good points and article. It is important to work with both a Realtor and a lender who has experience in condo sales, and to help guide them through the process. 

Sep 21, 2014 03:30 AM #6
Joy Daniels
Joy Daniels Real Estate Group, Ltd. - Harrisburg, PA

These are great questions John.  I know condo lend requires knowledge and experience.  Thanks for sharing yours.

Sep 21, 2014 09:28 AM #7
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

No condos, no HOA, it's "go fish", fresh out in small rural markets. Lots of land, waterfront, rec properties though. Plenty of owner financing options custom made, hammered out. Condos at ski areas, in cities but in small towns, villages, burgs, not so much.

Sep 21, 2014 08:27 PM #8
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great tips... condos are much more complicated that single family homes. I do a lot of this research up front when I list condos and truly wish more agents did the same. It would save a lot of time for the buyer and buyer's agent.

Sep 21, 2014 09:25 PM #9
Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

Great tips here John.  I think one of the biggest things to remember when buying  a condo is the monthly fees.  

Sep 21, 2014 09:34 PM #10
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Excellent post here. The condo purchase does have a few obstacles one doesn't encounter with single family homes - especially when financing is in the plans.

Sep 21, 2014 10:37 PM #11
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Good steps to follow when buying a condo. We have several around us, some are approved and easy to get financning for, others not so much. Always good to know your local market.

Sep 22, 2014 02:43 AM #12
Barbara Altieri
Kinard Realty Group - RealtyQuest Team, Fairfield and New Haven County CT Real Estate - Shelton, CT
REALTOR-Fairfield County CT Homes/Condos For Sale

John -- You're SO right on getting the questionnaire done early in the process. Working with an experienced condo lender like yourself should definitely be the #1 step.

Sep 22, 2014 02:47 AM #13
June Stark
Elite Realty-Luxury Homes & Condos On & Off the Strip - Las Vegas, NV
Las Vegas Condos & Luxury Homes Expert

Great article. Spot on!

Sep 22, 2014 03:44 AM #14
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

This is a great article, and yes, there needs to be a lot of pro-activity -- much more so than buying a detached.  You mention many of the reasons.

Sep 22, 2014 03:49 AM #15
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

Definitely agree with getting the condo questionnaire in the very beginning.  There are a ton of reasons why a condo won't certify and become non warrantable.  It's best to know that in the beginning so you can adjust your game plan or move on to another property.  

Sep 22, 2014 04:00 AM #16
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

George - thanks for the comment, getting things up front saves everyone headache!


Bob Ratliff tough to keep track of all the #'s and rules!  A condo cannot have less than 50% owner occupancy to be warrantable.  The 10% is the limit of what % of properties within a condo can be owned by one person.


Nina Hollander you do yourself & your clients a great service by knowing in advance what type of requirements a buyer needs for a particular development.  No point in showing a complex to a buyer if they don't have the down payment for a non-warrantable project.


Nick & Trudy Vandekar when it comes to condo purchases, that upfront research and knowledge of the local market is so important, I know folks looking to buy a Main Line condo are in good hands with you.


Kevin Mackessy spot on!  That questionnaire uncovers 99%+ of the potential issues right up front, it's an easy way to make a condo purchase relatively stress-free, just by getting the questionnaire completed asap.

Sep 22, 2014 05:00 AM #17
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

John - very good points and the buyer needs to know that all those he or she works with will have that knowledge including their own attorneys.

Sep 22, 2014 05:25 AM #18
Kate McQueen
CB&A Realtors - Cypress, TX
Tailored service for your real estate needs!

Good information and making all the right considerations up front is necessary.

Question:  Does the questionairre cover any upcoming special assessments, if any?  Special assessments can sometimes hit a homeowner hard and a buyer should know there is an assessment on the way if in fact there is one.

Sep 22, 2014 05:59 AM #19
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This is a great checklist for those considering buying a condo. There is more to consider than buying a single family home.

Sep 22, 2014 10:21 AM #20
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

John Meussner - knowing what condo fees cover is very important. We just looked at the condo with about 30% higher condo fees than normal in that market - and they realized, it does not even cover water and sewer!

Sep 22, 2014 01:52 PM #21
Michael Frank
American United Mortgage Corp. - Sandy Springs, GA

I can never figure out why real estate agents don't address these things up front, especially the selling agent. If I have to research all this during the mortgage process, it creates a great deal more risk to the buyer's ability to close on time  - if the transaction can close in the first place.

Sep 23, 2014 07:17 AM #22
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi John -- proper preparation is key.  Your list is a great guide for condo buyers to ask their lenders/agents --- getting the information quickly certainly can help with a timely closing.  

Sep 24, 2014 02:19 AM #23
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Needless to say, John Meussner ... I find great value in the info you share here regarding Condos.  As you so aptly said, they can have a few more details associated with their transaction!  I'm sure all that read this post will gain from it .. and that's exactly why we are here on AR ... well done!


Sep 25, 2014 04:38 AM #24
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude


Some really important information here about condos. They certainly present their own challenges, and knowing as much as possible up front about the HOA, % of owner occupancy, etc. can really help.  There are lots of condos in our area and plenty of buyers, but some really have a tough time qualifying because of the status of the associations. We've all learned a few things from you!


Sep 30, 2014 10:08 AM #25
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