Buying a condo is a similar experience to buying a house, yet there are some key differences between these two events. When you purchase a condo, you are buying a unit within a community and will have to pay maintenance fees on a monthly basis, and this is just one of the differences. If you would like to buy a condo, you should also realize that you may face some challenges when you try to get a mortgage loan to make the purchase. Here are some important things to know about getting a loan to buy a condo.

Lenders Have Stricter Rules

The first thing to understand is that lenders have stricter rules when it comes to issuing loans for condos in comparison to single-family homes. Lenders have stricter rules because there are risks with condos that are not as prevalent with single-family homes. Because of this, it may take longer for a lender to approve a loan for you if you want to buy a condo, and this is primarily because the lender may need to go through extra steps before agreeing to issue you a loan for the home.

Lenders Care About Owner-Occupied Rates

One of the differences between loans for homes and condos is something called the owner-occupancy rate. This rate is something that tells you how many units in a subdivision are occupied by the people who own the condos. If you want to qualify for a loan, you will likely need to choose a condo that has an owner-occupancy rate of 51 percent or higher. If the rate is lower, the lender may not give you a loan. This matters to lenders because of the differences in how owners treat their homes compared to the way tenants treat their homes. Condos in communities with high owner-occupancy rates tend to hold their values much more than areas where the units are predominately lived in by tenants.

Lenders Also Analyze the Health of the Association

Condos are part of homeowner's associations (HOAs) and there are key differences between communities that have good HOAs and those that have bad ones. Because of this, the lender you apply with will look at the financial reports and information from the HOA before they will approve a loan for you.

While you may face some challenges when trying to get a loan to buy a condo, you should not give up if this is what you want. Talk to a lender like Acceptance  Capital Mortgage today about what you can do to get approved to buy a condo.