Financing a condo is different from financing a single family home. Why you ask? It is due to Arizona Mortgage Lender’s requiring the entire condo project be eligible for home loan financing.
Condo Home Loan Differences
Just how complex is getting a condo home loan? The answer depends upon a myriad of factors. However, condensed down to a simple answer we are left with 2 vastly different levels of difficulty. Regarding condo home loans, the levels of difficulty depends on which condo approval process is used. The 2 condo approval processes are:
- Limited Condo Review
- Full Condo Review
As you may have guessed, Limited Reviews are simpler than Full Reviews. Limited Reviews do not require the level of information that a Full Review does. So who chooses which Review type is required? The answer is simple – Conventional loan regulations.
Condo Approval – Limited Review Eligibility
Home loans meeting specific Loan to Value (or “LTV”) limits can use the Limited Review process. LTV refers to how much a buyer borrows compared to the value or price of the condo. For example, when a borrower buys a condo for $300,000 and they borrow $240,000, their LTV is 80% ($240,000 is 80% of $300,000). LTV limits for Limited Condo Reviews are:
- Owner Occupied: 90%
- Vacation Home: 75%
- Rental Property: 75%
By Jeremy House