What is a condo?

Condominiums are a practical alternative for buyers on a budget looking to get a foothold in an urban or suburban real estate market. 

A condo is a privately owned residence inside a larger complex, where residents can enjoy the benefits of homeownership without the added cost and hassle of buying a house in the same area. Unlike a co-op, you will own the unit outright and share common spaces. 

Have your eye on your dream condo? Apply now and see how we can help! 

Like any other homeownership, buying a condo can come with pros and cons, depending on what you are looking for. 

• Required maintenance for the building and surrounding area is covered through condo association fees and/or homeowner association fees, so you won’t have to lift a finger for exterior upkeep. 

• Condo owners can enjoy shared spaces or amenities the building may offer. This can include inground pools or private gyms. 

• With complexes being built in high-demand markets, condo owners can live in their desired urban or suburban environments without the price of a single-family home. 

• While condo owners do have additional homeowners association (HOA) fees, benefits like lower down payments, a smaller loan and less in interest over time can make a condo more affordable than buying a home. 

• Depending on the location of the complex and amenities provided, HOA fees can deter some potential buyers. 

• Condos are not typically in as high a demand as houses in the same area. Multiple empty condos in the same complex can drive down demand when reselling. 

• Condos rarely distinguish themselves from other units in the complex. Any exterior changes are at the discretion of the HOA.  

Condos come in all different shapes and sizes to satisfy any needs you may have. 

This is the traditional style of condos, where you just own your unit. 

Private own apartments, or private condos, are condo units that the owner rents out to tenants. 

A condo building has individually owned condos inside of one residential building. 

With condominium developments, the land that a condo sits on is owned by the developer until the unit is purchased, then the ownership is transferred. 

Similar to single-family homes, detached condos are free standing and do not share walls with other units. 

A condo share is a condo with multiple owners, each owner is allowed certain days and time they can use the unit. 

There are several ways to finance your condo. Some of the more popular ones are conventional loans, VA loans, FHA loans, and USDA loans. 

Conventional loans are issued by private lenders such as banks and credit unions. With fixed and adjustable interest rates, these are one of the most popular kinds of loans. 

If you are a military service veteran or surviving spouse, you may be eligible for a VA loan from the Department of Veteran Affairs. 

Through the Federal Housing Administration, you can receive an FHA loan. Some of their requirements are having a minimum credit score of 580, 3.5% cash down payment option, and a maximum debt-to-income ratio of 50%. Condos purchased with an FHA loan will need to meet their guidelines and be FHA approved. 

If you are a low-income borrower looking for a condo in rural areas, the United States Department of Agriculture issues loans with no minimum credit score requirement and 0% down payments. You will have to meet their income requirements to be eligible for this loan. Most lenders will have additional requirements on top of the USDA, including two years of steady work and a 620 credit score. 

Condos are owned while apartments are rented, so the biggest difference between condos and apartments is that your condo belongs to you. With this long-term investment, owners can build credit and gain equity, and their property can increase in value over time.  

With the property title, condo owners are subject to additional expenses, such as property taxes and HOA fees. 

When purchasing a townhouse, you will also own the land your townhouse sits on. 

While condos and townhouses both allow affordable living options in desirable areas, buying a townhouse means you own and must maintain the land your property sits on. Both condos and townhouses have HOA fees, with condos normally being higher. Condo owners do not have to worry about their property’s upkeep. 

Getting a mortgage for a condo is the same as getting a mortgage for any other home.  Once you apply, your lender will help you take care of the rest. 

Before you start your search for that perfect condo, contact a lender who will look at your credit history, income and debts to determine how much condo you can afford. Lenders work to find the mortgage that works with you, whether you are interested in a conventional loan or are eligible for a VA loan.  

Ready to get started on your homeownership journey? Apply now! 

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