Thinking of buying a condo or townhouse? Our team is here to help. We can show you how townhouse and condo loans differ from loans for single-family homes, explain what you need to qualify for a condo or townhouse loan, and give you pointers to keep in mind when you’re looking. Then, all you have to do is fill out our Super-Simple Application™ to get started!
Some people prefer to live in a townhouse or condo rather than a single-family home, as they typically require less property maintenance and are more affordable. However, the interest rates tend to be higher for condo and townhouse loans, and the loans usually require more underwriting, making them more difficult to qualify for.
Townhouse loans are typically the most similar to loans for single-family homes. This is because buying a townhouse also includes purchasing the land the townhouse sits on, which isn’t possible for a condo. As a result, lenders are very familiar with these purchases and can handle them similarly to a single-family home. At the same time, lending for a condo looks different because of factors like the homeowner’s association, the character of the development, and more.
That being said, financing a condo loan is not that different from financing a single-family home. FHA and VA condo loans are available just as they are for single-family homes. Your lender might want more documentation and information from you to ensure that your condo qualifies for the type of loan you’re seeking since some loans are only available for warrantable condos. But once all that is done, you’ll still be able to move into the space you picked out and make it your own.
Rest assured that whether you’re buying a condo or a townhouse, our Loan Specialists can help you navigate the process and explore all your options.
What you’ll need to qualify for the condo or townhouse loan depends on where you’re lending from. To secure a conventional townhouse or condo loan, you will need a credit score of 620 or better and a minimum down payment of 3-5% of the total loan amount. Finally, your debt-to-income (DTI) ratio must be no higher than 36%, and the condo must be your primary residence.
For FHA condo loans, your credit score must be at least 580 and your DTI ratio no more than 50%. A 3.5% down payment is also required.
VA condo loans are a bit different. There is no minimum credit score or down payment needed. But obviously, you must either be an active member of the military, a veteran, or the surviving spouse of a military member or veteran to be eligible. And while there is no minimum DTI ratio requirement per se, if yours exceeds 41%, you will need “compensating factors” such as a higher credit score.
First and foremost, make sure you search for reputable condos and/or townhouses mostly filled by owner-occupants. Make sure you look at all loan options available; you may end up with more than one loan offer to choose from. Finally, be prepared to pay more in closing costs and wait for a closing date longer than is typical. The additional underwriting and documentation condo and townhouse loans require are usually the borrower’s responsibility
Zeus Lending makes it easy for interested parties in Texas to apply for townhouse and condo loans. Our Super-Simple Application™ takes no more than 3 minutes to complete. One of our Loan Specialists will then contact you on how to proceed. You are under no obligation whatsoever. If you do decide to move forward with us, our experienced and knowledgeable Loan Specialists will help you choose the best mortgage loan for your needs. We aim for 100% customer satisfaction, no matter what you’re looking for.
Fill out the application today and get started on the path toward purchasing the townhouse or condo of your dreams!