Ways To Buy A Condo In Florida

buy-a-condo-with-a-conventional-mortgage

People often try to get mortgages to buy condos only to learn that when doing so, the project must be approved by the institution guaranteeing or securitizing the loan.

When they discover their coveted condominium is unapproved, they have two options: Either get it approved, or find another place.

Getting a condo approved varies in difficulty depending on what type of mortgage will be used. VA and FHA loans (click this link for information about VA and FHA condo loans) are more difficult than a conventional mortgage, which must be approved by Fannie Mae.

You can search Fannie Mae’s approval list here: https://www.fanniemae.com/content/datagrid/condo_pud/condo_approved_projects_report-fl.pdf

When a Florida condominium is not on this list, it will need to be reviewed by an underwriter by one of the three scenarios listed below:

  1. Purchase a condo as a primary residence with at least a 25% down payment, and this will qualify for a limited condo review.
  2. Purchase it as a vacation residence with at least a 30% down payment, and this will also qualify for a limited condo review. Investment condos are ineligible for limited reviews.
  3. Purchase a condo outside of the occupancy and down-payment criteria listed in No. 1 and 2, and a lender will gather condo documentation with a full review and submit the information for a condo approval.

What is a limited condo review?

Due to the risks mortgage lenders take when loaning money for condos, underwriters typically review a condo’s stability and financial status. A limited condo review still does the same, but is not as intense as a full review.

Underwriters need to make sure only a certain percentage of the units are owned by investors, and only allow so many units to have delinquent bills. They further analyze the condominium association’s budget, verify it has reserves from collecting dues and confirm any pending litigation.

While a limited condo review can ease the underwriting process, make sure a mortgage professional is well-versed on this before having him or her take a loan application.

Here is some more reading about condos in Florida:

  1. The Complexity of Financing Condos in Florida
  2. Buy Condos With Government Loans