One of the most important parts of purchasing a condo in San Diego’s Downtown neighborhood is finding the right lender and loan options. Getting a mortgage for your condo will allow you to pay your purchasing costs in relatively small and feasible increments rather than paying for a unit outright. However, financing a condo is a bit more challenging than financing a home. Strict standards can make it difficult to qualify for condo loans and these funding products often have higher interest rates compared to loans that are designed to fund the purchase of single-family homes.
Two Parties Must Qualify
With home loans, borrowers must prove their financial fitness to lenders. Lenders want to know that buyers can cover their ownership costs, maintain their property and property value, and still enjoy a comfortable quality of life. With condo loans, however, both buyers and condo associations must be lender-approved.
To qualify for a condo loan, buyers will need to have regular, stable sources of income and stellar credit. They will also have to make down payments on their properties of approximately 15 to 25 percent. Condo associations cannot have pending litigation or forthcoming special assessments. These entities will also need to have sufficient budget reserves and all necessary forms of insurance. Fifty percent of all condo units will have to be owner-occupied and no single investor can own more than 10% of the units. These requirements ensure lenders remain in compliance with the lending guidelines that have been set forth by the Federal Housing Association (FHA).
When condo associations are not in compliance with FHA guidelines, buyers will have to fund the purchase themselves or try working with local banks. Properties like these are commonly referred to as “non-warrantable”. Getting funding from local banks for “non-warrantable” condos often entails down payments as high as 40 to 50 percent.
Applying for a Loan on an Approved Property
When both buyers and condo associations meet lending standards, the loan application process can be seamless and hassle-free. The first step in this process is to consult with a lender or mortgage broker to learn which products are best suited to your needs. Loan products are selected based upon a borrower’s credit rating, income and debt amounts, as well as his or her short and long-term purchasing goals. Consulting with a reputable mortgage broker gives buyers the opportunity to shop loans and lenders while learning more about the benefits and drawbacks of different funding options.
When you’re ready to make the move and become an official Downtown San Diego resident, reach out to 92010 Urban Living at (619) 649-0368. We are Downtown San Diego real estate experts and are ready to help you find your new condo, loft, or penthouse. ')}