Here’s the main question: How much is a down payment on a condo?
To answer that question fully, we need to explain real estate investing among other things. Getting a condo down payment comes with many different factors depending on what you’re looking for.
For example, if you’re looking to make this condominium an investment property, and need financing quickly for it I’d recommend you get a residential bridge loan.
But, if you’re looking to actually occupy the condo for the next 2-3 years then you could treat the condo the same way as a single-family home.
When I’m referring to treating it as a single-family home, I mean the average downpayment being 10% of the unit’s purchase price. And the range of a downpayment for a condo is usually 3-20% depending on a multitude of factors, which is similar to single-family home properties.
So what’s the difference between Condos and other property types like apartments, homes, and townhomes?
The main two differences are the qualifications each property type has for different mortgage types and the ownership of the property itself!
Stay with me… We’ll explain everything in this article.
Some condo developments across the US may not qualify for an FHA or VA loan and others may not be guaranteed by Fannie Mae and Freddie Mac!
Condo Downpayment Options in Los Angeles
According to Redfin, the number of condo units sold in June skyrocketed by nearly 88% year over year to 1,941 in California.
Condos have seen a very pleasant uptick in value over the years in Los Angeles specifically, due to the property styles’ high convenience, and personalization factors.
In some states, VA loans are easier to find in condominiums. In California, there were 9,290 condos that were approved for VA loans and 2,484 condos in Illinois. There are only 1,021 condos approved for VA loans if you look at Texas. Even in Florida, which has a relatively low number of FHA-approved condo developments, VA buyers can find over 2,350 projects.
Conventional Loans
These loans can get you financing for condominiums with only 3% down, a minimum 620 credit score, and cancelable private mortgage insurance (PMI). Condominiums are great because of the lower down payments. However, they use guidelines set by government-sponsored programs known as Fannie Mae and Freddie Mac, which means that your condo must be warrantable and specific.
FHA Loans
You’ll need at least a 580 credit score to buy a condo. To be eligible for an FHA loan, your home must have a condo ID number. Under the 2019 rule change, condominium communities and single units that would like to receive an FHA appraisal can go through the process too.
VA Loans
Active military members, veterans, spouses & eligible dependents can purchase a home without putting any money down or paying PMI. These loans are available with one of the best interest rates, so they’re perfect for military borrowers! The VA also has its own self-made list of condominiums, which we’ve shared above.
USDA Loans
The USDA offers a 0%-down-payment mortgage to low-income borrowers in rural areas to purchase a condo. There’s no minimum credit score requirement, but you need to meet USDA income limits and demonstrate you can handle the monthly mortgage payments. You can check the USDA’s property eligibility tool to find out what condos near you might qualify.
Differences between a Condo and a House, Apartment, or Townhome
- A condo is a type of housing typically owned by an individual and rented out to others. Condos are usually smaller than houses, but larger than apartments or townhomes.
- A house is a type of housing typically owned by an individual and rented out to others. Homes are usually larger than condos, but smaller than apartments or townhomes.
- An apartment is a form of housing typically owned by the building’s landlord and rented out to others. Apartments are usually smaller than houses, but larger than condos or townhomes.
- A townhome (also known as a row home) is a type of housing typically owned by the building’s landlord and rented out to others. Townhomes are usually smaller than houses, but larger than condos or apartments
A condominium is a type of residential real estate that derives its name from its use of multiple units and shared ownership. A condo is designed for rental purposes, with residents having little to no say over the overall design or construction of the building. In contrast, a townhome typically has two or more stories and it can be owned by an individual or corporation.
The differences between a condo and a house, apartment, or townhome are many. For instance, condos are usually smaller than houses and have only one level. Condos also usually require more of a down payment than the other options.
Townhomes are often mistaken for condominiums because they share some similarities, such as being small in size with only one level. However, townhomes have a shared wall whereas condos do not.
Apartments are typically much larger than condos and houses with multiple levels. Apartments also often offer more amenities than the other options as well as being less expensive to buy or rent.
Final Thoughts
Our goal with this post and with many others is to provide our audience with a deep toolkit of information. We know you’re gearing up for some type of investment purchase and want to take the next step into really controlling your finances.
Maybe you’re working a 9-5 and tired of not being able to get out of the cycle, or maybe you’ve just worked your entire life and finally have enough money saved up to get that passive income.
Whatever the case may be, we want to make sure you have all the tools necessary to start your Real Estate Financing journey.
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