Current condo mortgage rates
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What is a condo?
A condo is an individual unit in a community of other units, typically managed by a homeowners association, or HOA, and can come with access to common spaces like a gym or pool. As with buying a single-family home, buying a condo can be a worthwhile investment, but there are key differences between the two.
How do condo mortgages differ from conventional mortgages?
There are some differences in the process of getting a mortgage for a single-family home versus a condo.
Condo mortgages call for additional documentation, because lenders screen both the borrower (you) and the condo project. The lender looks at how many units the community has, for instance, the proportion of owner-occupied to tenant-occupied, as well as its financial footing and insurance coverage. Lenders also consider whether other owners in the community are current with their dues, and how many units are owned by a single entity. All of these factors have to check out in order for the lender to approve the loan.
These extra steps can also cost you more at closing, both in terms of time — it can take longer for the lender to do a thorough assessment — and money, since there could be fees to obtain the documents.
Getting financing for a condo might also require a higher down payment, depending on the type of loan you get. This might be easier to come by, however, since condos are generally less expensive than single-family homes.
If all of those details sound a bit daunting, it’s because they are. Condo mortgages can be hard to get. In response to the June 2021 collapse of an oceanfront tower near Miami, mortgage giants Fannie Mae and Freddie Mac rolled out new rules covering condo loans.
Condo mortgage rates vs. single-family home mortgage 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
- 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.
Condo mortgage FAQs
Mortgage rates in other states
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