FLORIDA CONDOMINIUM LENDERS – FLORIDA CONDO LOANS
Primary home as little at 5% down up to 25%.
Secondo Florida condo home as little as 10% down up to 25% down.
Investment up as little as 20% up to 25%.
Getting a Florida condominium loan has its challenges. Strict standards make it difficult to qualify for a Florida condominium loan, and loan costs may be higher on a Florida condo than for other types of real estate. Typically, for example, loan interest rates are higher for condominiums than for single-family homes. Florida condominium loan requirements vary by type of Florida condo loan such as FHA or conventional.
Tighter Standards for Florida Condos
The recent Economic and credit crises of the late 2000s have led to tighter restrictions on all Florida condominium lending. Florida condominiums in particular are viewed as risky by the lending industry because some of their biggest losses came from defaults on condominium loans. In fact, some Florida mortgage lenders make a point of rejecting Florida condo loans altogether.
Condominium Borrower Qualifications
As with any Florida mortgage, a condominium buyer must first qualify for the loan. In addition to having excellent credit and a steady source of income, certain Florida condo loan applicants may be required to make up to a 25% down payment, depending on the type of the loan. Florida condo lenders typically have tougher loan-to-value ratios (LTV) for Florida condo loans. LTV is how much a property is worth compared with how much money the borrower is putting down towards the purchase. If a Florida condo buyer makes a 20% down payment on the condo, for example, the loan to value or (LTV) would be 80%.
Florida Condo Association Qualifications
What makes a Florida condo loans so challenging is that, unlike other mortgages, the condo association also has to qualify in order for the mortgage to be approved. Condo loan applicants have have little to no control over this aspect of the lending process. Florida condo lenders now have new condo guidelines from the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. Fannie Mae requirements that must be met inorder to fund condo loans:
• All planned amenities must be finished if the development is more than one year old.
• More than 50% of the condominium units must be owner-occupied.
• No more than 15% of owners can be delinquent on monthly dues.
• Borrowers who make a down payment that is less than 25% will pay either an extra 0.75% of the loan amount at the closing or an interest rate that is approximately 0.25% higher.
• No single investor can own more than 10% of the units.
All Florida mortgage lenders, whether for FHA, Fannie Mae, Freddie Mac or conventional loans, will likely turn down Florida condo loans if the condominium association shows questionable financial health. In particular, condo lenders will look for associations that have:
• No anticipated special assessments.
• Adequate and appropriate insurance.
• Adequate budget and financial reserves.
• No pending litigation that could result in costly legal fees and lawsuits.
Non-warrantable Florida Condominium Loans
Florida condominiums that are not approved for Fannie Mae or FHA condo loan approval are referred to as “non-warrantable” and leave few options for borrowers. Florida condo buyers can either pay cash or try to secure a portfolio loan. In this situation, Florida loan applicants should expect very high down payments of potentially 30% or more and slightly higher than average interest rates.
Since it is in the best interest of all Florida condo unit owners that interested buyers can obtain financing, Florida condo owners can ask the development’s management company if their development is FHA or Fannie Mae approved. If the condominium development is not approved, owners can contact a local Florida mortgage lender to initiate the process for obtaining approval.