Financing a condo with a Conventional loan requires the HOA/Condo project be eligible for financing.
Condo Home Loan Approval
Mortgaging a condo with a Conventional loan involves an extra step. On top of borrowers needing a credit approval, the subject condo must pass an eligibility test.
“Condo Eligibility” refers to whether the HOA/Condo Project meets a set of rules. These rules must be met in order for a condo to be financed using a Conventional loan.
“Warrant-able Condos” is the common name for eligible condos. Ineligible condo’s are known as “Non-Warrant-able Condos“. Conventional financing offers 2 Condo eligibility test or review types. They are:
- Limited Condo Review (preferred)
- Full Condo Review
Limited vs. Full Condo Review
Lenders use both Limited and Full Condo reviews. While preferred, Limited Reviews do not work for every scenario. In fact, lenders select the condo review type based on these criteria:
- Occupancy Type
- Down Payment
- Completion Status
How do Limited Condo Reviews differ from Full Condo Reviews?
Limited Condo Review
As the name suggests, a Limited Condo Review is a simple HOA/condo project review. Compared to the Full Review, a Limited Review presents far fewer hurdles during the review process.
When Does a Condo Qualify for a Limited Condo Review? Contact The HOUSE Team for more
Benefits of Limited Condo Review
The simpler Limited Condo Review option offers many benefits to borrowers. For example:
- Investor ratios not an issue
- HOA dues late pays do not matter
- Budgeted Reserves not reviewed
- Faster processing
Full Condo Review
A Full Condo Review option is more in depth than the Limited Review. An HOA/Condo project receives a more rigorous review under the Full Review. In fact, Full Reviews require the HOA complete a form with 40+ questions and a budget is review.
However, the Full Review provides allows for a loan option for buyers who put less money down. Aside from down payment other reasons for using a Full Condo Review exist.
When is a Condo Subject to a Full Condo Review? Contact The HOUSE Team for more