Getting a Mortgage on a Condo
If you are looking to purchase a condominium in Fort Lauderdale or South Florida you need to make sure you are dealing with a mortgage professional who is an expert and going to educate you on the process. Your mortgage banker or broker needs to make sure the condo is warrantable according to Fannie Mae & Freddie Mac’s guidelines or to check to see if it is an FHA approved project.
Let’s start with getting a Conventional loan on a condo in Florida. It is easiest if you are putting down 25% on a primary residence or 30% on a 2nd home because you will get what is called a Limited Condo Approval which requires getting less documentation to get it approved and it doesn’t require the condo project to have 10% of it’s budget in reserve and a few other items. Just because the 10% reserve requirement isn’t needed for the loan doesn’t mean it’s not important. You need to know that if there is an assessment of some sort you will be responsible for paying it out of your pocket.
You can get financing on a primary residence on a condo in Fort Lauderdale and all of Florida for as little as 5% down but you will have to go through the full condo approval process which requires a full condo questionnaire, a copy of the budget, and the condo documents. Currently, you will need at least a 680 middle credit score and a debt to income ratio under 41% which is much more restrictive than FHA or if you are putting down 20%. Although you really shouldn’t be above that percentage on your debit to income ratio regardless of what is allowed.
Some of the main items that can disqualify a condo building from Conventional financing are as follows:
- If 15% or more of the unit owners are 30 days or more behind on their condo association dues
- If there is litigation (there are some exceptions)
- If anyone investors owns more than 10% of the units
- If more than 50% of the units are investment properties
- Not enough Fidelity bond coverage
- If there is a rec lease
- The list goes on…..
In order to get an FHA loan it will need to be on FHA’s Approved Condo list. If it is not an FHA approved condo you have to get the how condominium project approved which is very involved and can take 6-8 weeks with FHA.