Financing Condominiums can be accomplished through many avenues depending upon the project and the individual buying. The risk to the bank must also be considered. The majority are financed using conventional conforming lending which fall under Freddie Mac and Fannie Mae project guidelines. These condominium guidelines require varying levels of project analysis based on the overall risk of the transaction. The more risk for a bank the higher the rate or they may not accept the purchase transaction at all. When looking at a project, more risk to the bank means the larger the loan percent to the value and the more they review the project. Banks also consider the use of the condominium. Will it be used for investment, vacation home or a primary residence? All these factors will affect rates and approval of your loan.

Your loan may not be fully approved until an appraisal has been completed and information on the project has been gathered. Limited condo project review is for primary residence and second vacation home transactions with loan to values less then 75%, only an appraisal is required to verify property and project marketability in these cases.

Greater than 75% to 100% loan to value on a purchase or investment rentals will require a 1028 Fannie Mae project approval, where the lender or developer has submitted the appropriate legal documents to Fannie Mae and a project approval has been issued.

What does this mean for the buyer? It is important to know if the project has been approved by Fannie Mae or Freddy Mac prior to choosing a lender. If the project has been approved you may want to consider using the projects approved lender. This will save you on rates, lower fees and a quicker closing.

If you chose to work with another lender, make sure the lender has financed condos before and is familiar with the process. The staff at SpokaneCondoSales.com we will be happy to refer you to qualified lenders that can save you time and money.