How To Get a Mortgage For A Condo
Many think that you need to put 20% or more down and a lot of banks will require 25% down on a primary residence and 30% on a second home so that the financing falls into the “Limited Review” condo requirements that Fannie Mae & Freddie Mac require. You can buy a condo with as little as 3% down if it’s a primary residence.
There are more requirements when you put less than 25% down on a primary, 30% down on a second home, or if it’s an investment property. What many do not realize is that banks will put on their own additional requirements called “overlays” in order to lend in a condo project. One is that at least 50% of the units in the condo project have to be primary or second homes where Fannie Mae does not care about the amount of those when someone is purchasing it as a primary or second home.
Another is that at least 10% of the revenue must be set aside as reserves each year however they go onto say that “the lender may use a reserve study in lieu of calculating the replacement reserve of the 10% ….” provided they meet a few other requirements.
You need to work with a condo expert that knows these rules, knows how to read the financials, and their company will fund the loan. We will!