Low Down-payment Financing for Townhomes
Since the "great recession," getting a low down payment loan for a condo — FHA or otherwise — can be a challenge for buyers who want to move into a complex recorded as a "condominium" as opposed to a "Planned Unit Development" (PUD). However, it’s not impossible. Knowing your own finances and researching the condo complex and Condo Homeowners Association will help you find a condo or town home you can still purchase with a low down payment.
Borrower qualifications
Every loan requires different qualifications for a borrower, even folks who are borrowing money to buy a condo. In addition to the typically required excellent credit and steady employment, many borrowers of complex recorded as a condominium may be required to put a 10 percent or even a 25 percent or higher down payment unless the complex is currently approved for low down payment financing.
Condo Homeowners Association
One of the hurdles to buying a condo is that it’s not only your personal qualifications the lender will look at, but also the qualifications of the condo association. According to Investopedia, for a complex to be approved for FHA or low-down conventional financing, it requires conditions such as:
Lenders also make sure the Condo Homeowners Association itself is in good shape by looking for the following:
Other Options
If those situations aren’t met, the condo complex is labeled “non-warrantable,” but that doesn’t mean all hope is lost. It does mean you’ll likely have to pay cash for the property or obtain a different type of loan.
Borrower qualifications
Every loan requires different qualifications for a borrower, even folks who are borrowing money to buy a condo. In addition to the typically required excellent credit and steady employment, many borrowers of complex recorded as a condominium may be required to put a 10 percent or even a 25 percent or higher down payment unless the complex is currently approved for low down payment financing.
Condo Homeowners Association
One of the hurdles to buying a condo is that it’s not only your personal qualifications the lender will look at, but also the qualifications of the condo association. According to Investopedia, for a complex to be approved for FHA or low-down conventional financing, it requires conditions such as:
- More than 50 percent of the condos must be owner-occupied.
- No one can own more than 10 percent of the total units.
- At least 85 percent of owners must be current on their dues.
- If the condo complex is more than a year old, all the planned amenities must be in place.
- Borrowers who make a down payment that is less than 25% will pay either an extra 0.75% of the loan amount at the closing or an interest rate that is approximately 0.25% higher.
Lenders also make sure the Condo Homeowners Association itself is in good shape by looking for the following:
- Sufficient building and liability insurance
- Adequate budget reserves
- No pending litigation that could result in costly legal fees and lawsuits
- No anticipated special assessments (for roofs, parking lots, etc.)
Other Options
If those situations aren’t met, the condo complex is labeled “non-warrantable,” but that doesn’t mean all hope is lost. It does mean you’ll likely have to pay cash for the property or obtain a different type of loan.
Provo Townhomes Approved as Planned Unit Developments (PUD)
- Alpine Brook
- Arlington
- Canyon Brook Townhomes
- Deerhaven
- Eagle RidgeEastgate
- Franklin Commons
- Georgetown
- Highland Park
- Independence Ave
- Lone Tree
- Marrcrest
- Mokal Park Place
- Park Ridge
- Pioneer
- Riderwood
- Sunset
- Villages at Quail Valley
- Westbridge
- Westgate
Denise Martin and Jessica Rowley, Provo Realtors
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Denise Martin and Jessica Rowley, Orem's Nicest Realtors
SoldByDenise.com (801) 602-9552 Denise Martin (801) 960-8011 Jessica Rowley Team@HomeRealty.com |
