Financing a Condo

Can you buy a condo with financing? Most developments do not qualify for Fannie Mae
or FHA / VA financing. This means putting at least 25% down to qualify for Freddie Mac.
Statistics extracted from the South East Florida MLS show that over 80% of all condos
are sold to cash buyers, and just a few are sold with financing.

In order for a project to qualify:
The owner occupied ratio must be over 55%.
The delinquency ratio cannot exceed 15%.
There must be over 10% in reserves as excess of the association annual budget.

Hurricane Wilma depleted most development reserves. The real estate depression
caused a large amount of delinquencies and when the prices dropped, investors picked
up the opportunities. Developments that previously qualified, now no longer do.

To be approved again, the Lender requesting the approval must pay a minimum of
$2,500.00 plus $30 for each unit in the project to Fannie Mae out-of-pocket and before
closing. The applicable project review fee will be assessed regardless of the Fannie
Mae decision of approving or rejecting the development.

Follow the link for the approved Fannie Mae projects in Florida. Here is the link for FHA
But being currently approved does not mean that it will still qualify for financing.

The lender / bank will have to request from the association the “Condo Questionnaire”.
The above described requirements must be there, or the complex no longer qualifies
for financing.

Conclusion: If you want to buy a condo, look in the approved list, and make sure that
approval is within the past two years. Then look for condos that are for sale ONLY in
those buildings that are approved. Otherwise, you will have to put 25% down payment
so you qualify for Freddie Mac financing.

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