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Condominiums offer a wide range of benefits for consumers. Compared to a standard single-family home, these properties are typically smaller and more affordable—an ideal set of benefits for first-time buyers and young professionals. However, if you’re attracted to these benefits, you should know that the mortgage process isn’t as simple as a typical home loan. To help you better assess your options, here’s what to know about financing a condo.

How Expensive Are Condo Mortgages?

When looking at the big picture, condos are generally less expensive than a comparable single-family home. However, the mortgage terms may be comparatively costlier.

For example, condo mortgage rates tend to be slightly higher than standard home loan interest rates. This discrepancy is due to more significant risks associated with condo properties—such as community management. As a result, your monthly payments may still be lower than what you’d pay for a house, but the interest is higher.

Sometimes, you can reduce these higher rates by making a sizeable down payment. Depending on your lender, you might be required to make a down payment of 25% to receive reduced rates.

Are There Property Requirements for Loan Approval?

mortgageTo get approved for a condo mortgage, your lender will likely check a few factors regarding the entire property—not just your unit. For example, many will only finance mortgages if the condo property is at least 50% owner-occupied and that no tenant owns more than 10% of the building. The history of the association and their fees will also determine the viability of the loan.

How Will the Condo Association Help With Lending Terms?   

When you live in a condo, you will have to pay regular dues to the property association to pay for general building maintenance needs. Typically, these services consist of cleaning the common areas, landscaping, roofing repair, and security.

Although these dues will add to ownership costs, they will help you avoid expensive repairs and maintenance fees that homeowners often endure. These savings can help make mortgage payments more affordable in the long run.

 

Whether you’re interested in purchasing a condo or moving into a bigger single-family home, Dan Main will guide you through the mortgage process. Serving the St. Charles, MO, community for more than two decades, Main is well-versed in all condo and home loan options. If you’re a first-time homebuyer, this professional will also introduce you to solutions to save on costs—including down payment assistance and FHA loans. To learn more about these resources, visit Dan Main online or call (636) 284-4144.

Dan Main: NMLS # 502036
201 Salt Lick Rd
St. Peters, MO
This is for informational purposes only and not
 an offer to lend or extend credit.

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