Compare current condo mortgage rates
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Current condo mortgage rates
Mortgage rates for condos and other types of properties have been volatile in recent years. During the pandemic, rates on 30-year fixed mortgages fell below 3 percent. At times in 2022 and 2023, they had climbed above 7 percent. The main driver has been the return of inflation, and the Federal Reserve’s response — namely, raising interest rates.
Condo mortgages tend to have slightly higher interest rates compared to a loan for a single-family home, because lenders need to compensate for the additional risk of financing property in an association. If you’re considering investing in a condo and renting it out, you’ll need a higher down payment, as well.
How to get a condo mortgage
- Work on your credit score. Your credit score is the primary driver of your mortgage rate, so start boosting it right away.
- Start saving for a down payment. You don’t need 20 percent down if it’ll be your primary residence, but the more you can save, the more flexibility you’ll have.
- Set a budget. It’s fun to fantasize about buying the penthouse, but it’s much more practical to purchase only what you can reasonably afford. Your monthly mortgage payment will be even higher thanks to rising interest rates, so you might have to adjust your expectations (if not your budget) to find an affordable condo.
- Compare mortgage lenders and offers. Before setting out to look for a condo, compare mortgage lenders, loan types and offers. There are many ways to finance a condo, so doing the legwork can help you uncover the best — and lowest-cost — option.
- Get preapproved. Once you have a lender in mind, get preapproved. That way, you can confidently make an offer when you find the right property.
- Do your homework on the property. Get as much information about the community as you can. If an association you’re interested in is in financial trouble, that could make it more difficult to get approved for a loan, or ultimately cost you more for the riskier undertaking.
What are the qualifications for a condo mortgage?
In addition to meeting down payment and credit requirements, you’ll also need to meet debt-to-income (DTI) ratio requirements, which vary based on loan. For a conventional condo mortgage, lenders generally look for a DTI ratio of no more than 36 percent; for an FHA loan, 50 percent; and for a VA or USDA loan, 41 percent.
Your finances are just part of the picture, however. The condo association where you’re buying also matters. After an oceanfront condo tower near Miami collapsed in 2021, lenders tightened rules around condo lending, and have begun scrutinizing the physical and financial condition of condo buildings. Fannie Mae and Freddie Mac exclude condos from mortgage eligibility for a variety of reasons: because of structural defects, because they’re considered condo-hotels, because they’re in mixed-use buildings with a large percentage of commercial uses or because their reserves fall below minimum requirements.
What are the different types of condo mortgages?
If you’re planning to buy a condo to live in, you can finance it in the same way you’d finance a single-family home. Your options include:
- Conventional loans – 3 percent or 5 percent down, with a 620 minimum credit score
- FHA loans – 3.5 percent down with a 580 minimum credit score, or 10 percent down with a 500 minimum credit score; must be an FHA-approved condo
- VA loans – No minimum down payment or credit score; must be an eligible service member or veteran; must be a VA-approved condo
- USDA loans – No minimum down payment or credit score; must be in an eligible location
- Non-warrantable condo loans – If you’re buying in a condo that isn’t financed by the traditional options, this might be your only choice. Rates are higher, perhaps by 2 percentage points or so.
Should you get a condo mortgage?
Compared to single-family homeowners, condo owners are less likely to use mortgages. If you don’t have enough cash to buy the unit outright, though, and need a loan, the process is quite similar to getting a mortgage on a house.
What are some alternatives to purchasing a condo?
Condos are the most common legal framework for ownership of mulitfamily living spaces, but cooperative units, or co-ops, are another option. Most common in New York City, co-ops are structured so that residents own shares in a corporation rather than the actual real estate. You can pursue financing to purchase co-op shares using a mortgage lender or bank, and the process is somewhat similar to financing a condo. A co-op loan isn’t as easy to come by as other types of mortgages, but some lenders do specialize in them. They tend to cost more than a condo loan, as well.
Condo mortgage FAQs
Mortgage rates in other states
- United States
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
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- Washington DC
- West Virginia