All properties have to be appraised and underwritten to qualify for financing. Since a CONDO or CONDOTEL (CONDO-HOTEL) has a group ownership structure, the process has a few more steps. These additional steps can be confusing to the borrower, so I've laid out a simple process to pollow.
- Get Pre-approved for a loan, any type. But please note that Condos have HOA dues added to your PITI (Principle, Interest, Taxes and Insurance). Make sure you qualify with the added HOA amount which is shown on the MLS listing.
- Find the Condo you're interested in.
- Look on the Fannie Mae and FHA websites to see if you building is already project approved, if so SKIP to Step 5. (Links to sites at bottom of page)
- Have your agent or lender contact the HOA (Home Owners Association) to find out if the project is approved for Fannie Mae financing. This is the correct terminology even if you're doing a Jumbo loan (which is not Fannie Mae) since those are the standards most lenders adhere to. If there's been a recent financed sale in the building it will be easy to determine. If there hasn't been a recent financed sale it will be more difficult to determine.
- Lender will require a short or long form questionnaire to determine eligibility and your down payment (DP). DP could be 3%-20% depending on project approval. The HOA typically charges for the questionnaire, but it's good to get them up-front so you can see if you're still interested in the property and you have enough for the DP.
- Once you have the questionnaire and the loan-pre-approval you're ready to write a contract.
- Make loan application and the loan will progress the same as any other type of property.
FHA approved property Lookup https://entp.hud.gov/idapp/html/condlook.cfm
Fannie Mae approved property lookup https://www.fanniemae.com/singlefamily/project-eligibility-review-service
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