Few consumers have the spending power to enter into condo negotiations as cash buyers. So, when buying a condo in downtown San Diego, it’s important for potential buyers to understand the loan options available and how they are structured to meet a very broad range of needs. Following are some of the available financing options for San Diego condos along with information on what it takes to qualify for them.
VA Loans
VA loans are available to veterans who want to purchase condos in downtown San Diego. These loans allow for 100% financing and they do not require borrowers to purchase mortgage insurance. They come with fixed interest rates and 15 or 30-year terms. Best of all, with these loans all of the closing costs can be paid by the seller. VA loans are only available, however, for a very select group of properties. Veterans can ask their agents for listings that are VA-approved or they can search online for updated lists of VA-approved properties.
FHA Loans
FHA loans are among some of the most popular funding options among residential property buyers given that these products often allow for down payments as low as 3.5% when buyers accept 30-year repayment programs. FHA loans are specifically for properties that are approved by the Federal Housing Authority (FHA), which makes it necessary for buyers to target only those condos or lofts in Downtown San Diego that are FHA-approved. Unlike VA loans, FHA loans do require mortgage insurance and buyers will have to pay their own closing costs.
Conventional Loans
Conventional loans are not reserved specifically for properties that are FHA or VA-approved, however, they do require people and properties to meet specific requirements. In addition to the borrower’s own financial fitness, lenders will assess the financial fitness of the condo building, the legal status of the existing Homeowners Association (HOA), and the ratio of leased properties to units that are owner-occupied. Although these loans can be used to finance a greater variety of condos in the downtown San Diego area, typically buyers must put at least 20% down in order to establish the required loan to value (LTV) ratio of 80% or less. Buyers with superior credit often prefer conventional loans, both for the greater access that these options provide and for the greater variety of loan terms that are often available.
What if a Downtown San Diego Condo is in Litigation?
The legal status of a condo HOA will have a significant impact on the availability of all of these funding options. When a condo is in litigation, there are no legitimate options in FHA financing and very few conventional loan options. Unfortunately, there are some loan officers who will work to push loan applications through in spite of this fact. Nonetheless, condo buyers are legally required to inform lenders that the condos they are targeting are in litigation. This must be disclosed in writing to the lender before the transaction is completed. Conventional loan guidelines do not allow funding for condos in which HOA litigation exists. These properties are generally best left to cash buyers. It is important to note, however, that many condo buildings go through HOA litigation at one time or another. You can learn more about what’s required to secure a mortgage for a downtown San Diego condo here.
You might be excited about your first big property purchase, but buyers should diligently seek options that are best aligned with their own unique purchasing goals. If you’re looking for downtown properties, including Downtown San Diego Columbia District condos, Marina penthouses, or East Village lofts, reach out to the Downtown San Diego real estate experts at 92101 Urban Living, which has been a leading real estate firm in Downtown for over 10 years. Give us a call at (619) 649-0368 and let us help you find your Downtown condo, loft, or penthouse. We look forward to hearing from you! ')}