How to buy a condo with confidence
Know the loan requirements
You'll want a loan that can be sold to Fannie Mae, one of the big government-owned companies that provide most of the home loan money in this country.
That will make it easier for you to qualify for the cheapest possible mortgage.
Conventional lenders usually demand:
- A cap on commercial space of 20% of the complex's square footage.
- At least 10% of association dues be deposited in reserves.
- At least 51% of the units in a new building be owner-occupied.
- No current litigation regarding safety, structural soundness, habitability or functional use.
- No single entity can own more than 10% of the units.
- Not more than 15% of association dues can be more than one month late.
- The building be properly insured.
"Every lender has to abide by the same rules for condo eligibility," says loan officer Hillary Legrain of First Savings Mortgage in Bethesda, Md. "However, some lenders take the Fannie Mae guidelines and make them more restrictive."
You’ll find a list of Fannie Mae-approved condos by state here.