(801) 602-9552 Denise or (801) 960-8011 Jessica Team@HomeRealty.com

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:

  • 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