Financial decision
With a condo, the lender underwrites two borrowers: you, and the building.
Condominiums are frequently the most affordable path into ownership, and for many buyers they are the right call. But condo financing carries a requirement no single-family purchase has: the project itself has to qualify. Buyers learn this late and expensively.
At a glance
You own the interior of your unit and a share of the common elements. The homeowners association maintains the exterior and grounds, funded by monthly dues and occasional special assessments.
You own the structure and the land. All maintenance, insurance, and capital repairs are yours, with no association approval and typically no dues.
| Factor | Condo | Single-Family Home |
|---|---|---|
| What you own | Interior plus a share of common areas | Structure and land |
| Monthly association dues | Yes — counted in qualifying | Rarely |
| Exterior maintenance | Association | You |
| Lender review of the project | Required | Not applicable |
| Special assessment risk | Yes | No — but repairs are all yours |
| Typical entry price | Lower | Higher |
You can be a perfect borrower and still be declined because the building's reserves are thin or an owner is suing the association.
Plain English first, then the rule as it is published, then what it means for your file.
“Lenders must ensure that the project meets Fannie Mae's project eligibility requirements, including review of the budget, reserves, insurance, and any pending litigation.”
Ask for the association's budget, reserve study, master insurance certificate, and litigation disclosure before you fall in love with the unit. Your lender will need all of them anyway.
“No more than 15% of the total units in a project may be 60 days or more past due on their common expense assessments.”
This is entirely outside your control, which is why the association questionnaire should be ordered early — not in the last week before closing.
“A condominium unit is eligible for FHA insurance only if the project is on the list of FHA-approved condominium projects, or the unit qualifies under Single-Unit Approval.”
Check HUD's approved-project list before writing an FHA offer on a condo. Single-unit approval exists but adds review time and has its own limits.
You want a lower entry price, a lock-and-leave lifestyle, or a location where single-family inventory is out of reach — and the project's finances check out.
You want control over maintenance and improvements, no association authority over your decisions, and the broadest set of financing options.
Condos can be an excellent buy. Just vet the association's finances with the same seriousness you apply to the unit, and clear the project with your lender before you are emotionally committed.
Yes. Dues are included in your monthly housing expense, so a high-dues building directly reduces the price you can qualify for.
A project that fails agency eligibility — too many rentals, pending litigation, thin reserves, or a single owner holding too many units. Financing then requires a portfolio lender at a higher rate.
It depends on the legal form of ownership, not the architecture. Many townhomes are planned unit developments, which face a much lighter project review.
Every rule stated on this page is traceable to the agency handbook that governs it. Guidelines change — confirm anything time-sensitive with a licensed loan officer before acting on it.
Reviewed by Brian Mix, licensed loan officer (NMLS #111175) · Last checked July 2026.
Ask RED. It can walk through your specific numbers, explain any term on this page, and point you to the guide that goes deeper — no credit pull, no sales pressure.
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