Is a condo in the cards for you? Or have you crossed it off your list because it’s too hard to get a decent loan? We have some good news.
New guidelines from the Federal Housing Administration (FHA) means more homebuyers may be eligible for a government-backed mortgage. That could mean a lower down payment and easier qualifying than what is required for conventional loans for condos.
“The federal agency released new guidelines Wednesday for the types of mortgages it will insure at condominiums,” said the Los Angeles Times. “Just 6.5% of the 150,000 condominium developments in the United States were previously eligible for FHA-backed mortgages. But the FHA will start backing mortgages for individual units and will have greater flexibility to react to changes in market conditions.”
According to the National Association of Realtors (NAR), “The changes, many of which NAR has championed for over a decade, should yield thousands of new homeownership opportunities and help alleviate affordability restraints impacting markets across the country.”
Condos are often a more affordable option than single-family homes, which is what can make them so attractive to first-time buyers. The low-maintenance level is also an important factor. Because condos typically have homeowner’s associations (HOA), front-yard maintenance is usually taken care of, and there are generally no yards to worry about.
Some homebuyers look at HOAs as a negative because of what they consider to be strict rules governing what they can and can’t do, and also because of the fees. But, the truth is that most master-planned communities today have HOAs, which means the same rules and fees will apply.
“HOA fees typically can range from about $200 to $300 a month; other factors may contribute to how much the fee will be, like your location, unit size and available amenities,” said Magnify Money. Monthly condo association fees can go as high as $700 or more, also depending on the amenities and services provided.”
You’ll definitely want to do a strict comparison between any condo you’re considering and a single-family home. It may turn out that you can get more for your money with a home that’s not in a planned community and therefore doesn’t have fees. Or, the converse may be true. Even with HOA fees, a condo may be the better buy simply from an affordability standpoint, but also because it’s newer, has more space, or is in a better location.