Overview
Condominium financing is more complicated than single-family financing because the lender approves both you and the condo project. The HOA's financial health, owner-occupancy ratio, percentage of single-owner units, litigation, and reserves all factor in. A perfectly qualified buyer can have their loan declined because the project doesn't meet Fannie Mae, Freddie Mac, or FHA guidelines.
Conventional condo loans require the project to be 'warrantable' — meeting Fannie Mae or Freddie Mac's condo project guidelines. Most established condos meet this. Non-warrantable condos (those that fail one or more guidelines — too many rentals, single-owner concentration, ongoing litigation, inadequate reserves) require specialty Non-QM condo financing at higher rates.
FHA condos require separate FHA approval at the project level. There's a public FHA-approved condo database — only properties listed there qualify for FHA financing. As of 2019, individual unit approval is also possible in some non-approved buildings ('spot loans'), which expanded condo accessibility for FHA borrowers. Always verify project approval before making a condo offer.
Recommended loan programs
Frequently asked questions
What makes a condo 'warrantable'?+
A warrantable condo meets Fannie Mae and Freddie Mac's project-level guidelines: owner-occupancy ratio (typically 50%+), no single owner controlling more than 10% of units, no ongoing litigation, adequate reserves (typically 10%+ of operating budget), and adequate insurance. Most established condos meet these. Newer projects, hotel-style condos, and projects with significant investor ownership often don't.
How do I know if a condo is FHA-approved?+
Check the FHA-approved condominium database at HUD's website. Search by project name or address. As of 2019, FHA also allows 'single-unit approval' (spot loans) in some non-approved buildings if the project meets certain criteria — your loan officer can run an analysis to see if a specific unit qualifies.
Does HOA debt affect my qualification?+
Monthly HOA dues count toward your DTI as part of your housing payment. Lenders use the full HOA amount, not just the principal mortgage payment. Special assessments and pending major repairs can also affect approval — the lender will request HOA financial documents and may decline if the project shows signs of distress.
What is a condotel?+
A condotel (condominium-hotel) is a building that operates like a hotel with individual unit owners — typically resort properties in Florida, Nevada, or coastal markets. They're almost always non-warrantable and require specialty financing at higher rates (typically 1-2% above conventional) and larger down payments (typically 25%+). DSCR loans are sometimes used for investor purchases of condotels.