Townhome VS Condo Financing
We get this phone call or email a lot:
“We heard that condos can’t get regular financing. Is that true?”
The short answer is no that is not true. Here is the scoop in todays real estate market.
For the purposes of this discussion a detached home and townhome are considered one in the same. The condo is the outlier. An easy way to find out if a unit is a condo vs a townhome is to ask the HOA how the property is insured. The HOA can tell you if its insured as a condo. Sometimes properties have confusing names like “Townhomes on The River” only to find out they are actually condos so always ask.
Financing for condos works like this. If you want to put less than 20% down you must go FHA with a minimum of 3.5% down. You will have monthly PMI with FHA and its not cheap. For every $100,000 you borrow you’ll pay $1,350.00 a year in PMI in the form of monthly fees and $1750 as a one time up-front fee financed into the loan. Not cheap.
The caveat is the condo MUST be FHA approved. Many are not. If not FHA approved then your only other option for financing is to put 20% down going conventional. This will get you better rates and NO monthly PMI but many clients don’t have 20%+ to put down especially on condos as most condos are priced for first time buyers.
As always talk to your lender if you ever have ANY questions.
Max A Kallos
404-277-5884 cell
[email protected]
NMLS 156311 MLO NMLS 170267
Recognized in ‘Atlanta’ Magazine as a Five Star Mortgage Professional
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