When starting the home buying process most consumers do not realize that the type of property they are looking for can have a big impact on what loan products they may have at their disposal. This point is illustrated best when talking about condominiums. Most buyers do not realize that there are certain restrictions that lenders place on condo purchases that do not exist for stand-alone properties. Typically, for a stand-alone home, the borrower has to credit, income and asset qualify. The property must be in relatively good condition and the purchase price must be supported by an appraisal. With a condo not only does the buyer have to qualify but so does the condo association. Lenders will ask to see various financial and occupancy statistics and must meet certain levels.
Condo Complexes that have a majority of renters residing within will have trouble qualifying. Complexes that do not allocate enough for a reserve in their budget will have a hard time qualifying. The complex’s insurance can also be cause for concern. Some Complexes/Associations must be prior approved by a government agency to qualify. These agencies include, but are not limited to, the Federal Housing Authority and the Veterans Administration. These are 2 of the more popular providers of loans for 1st time home buyers. They are not the ONLY programs, however. Fannie Mae, Freddie Mac and various private lenders will lend in these complexes. It is the loan officer’s job to educate the buyer on these various programs, their pros and cons, and allow the buyer to make an educated decision. Just because an option is available does not mean that it is palatable to the buyer. Ultimately he or she must make up their own mind, but far too often buyers are told that its FHA/VA or bust and that is simply not the case.
Knowing these things ahead of time, and discussing them with your loan officer and/or Realtor can eliminate some complexes right off the bat and not lead to heartache down the road.