Applying for a loan to purchase a home requires time, effort and patience. When that home is a condominium it can be more complicated. As with any mortgage, the buyer must qualify for the loan, but with condos the community must also qualify in order for the buyer’s mortgage to be approved. Some of those additional loan requirements may include:
- at least 50% of the units must be owner occupied
- no more than 15% of owners may be more than 30 days delinquent on monthly dues
- the HOA must have adequate budget reserves and a reserve study
- the HOA must have adequate and appropriate insurance
- there can be no construction defects or other pending litigation
Lenders review the HOA’s resale certificate and may also request budgets, financial statements, reserve study, minutes and insurance documents as part of the loan approval process. If there is any concern about the community’s financial health or if there are other issues, the buyer’s financing could be denied, jeopardizing the sale..
When buying or selling a condominium there are many moving parts. Work with a Realtor® and lender experienced in marketing and financing condos. Find out what you need to know before listing your condo for sale or before buying a property in a condo or HOA community. The more you know, the less opportunity for problems or issues in the transaction.