Home Financing on a Condo

Condos have become increasingly more difficult to finance.  The following is a short list of what to look out for.

If the subject property is a condominium the lender will require the following:

• Completed HOA Certification
• Master Insurance Declarations Page (Dec. page)
• Fidelity Bond

The lender may also require the following additional documentation:

• Current Budget and Reserve Analysis
• Articles of Incorporation
• Covenants, Conditions and Restrictions (CC&Rs)
• By-Laws

The two biggest concerns lenders have with condominium projects are owner occupancy and pending litigation. Owner occupancy usually must be at least 70%, but some lenders will allow owner occupancy to be lower if the LTV on the subject property is low.
If you discover the Association is presently in litigation you need to get the details right away. If your transaction is a refinance, contact your loan officer, if it's a purchase, contact the seller's Realtor for information. You will most likely need a letter from the HOA and/or the representing attorney explaining what the suit is about. Most lenders will not lend in a project with litigation specifically involving the construction of garages, carports and the actual structure. Get the facts immediately.