Compare current condo mortgage rates

Current condo mortgage rates

Generally, condo mortgages have slightly higher interest rates than mortgages for standard, single-family homes. This is due to the perception by lenders that condo mortgages are riskier, particularly if the mortgage is for a second home or investment property. 

Rates for condo loans remain higher now than they have been in recent years, though economic uncertainty has driven rates on all types of loans lower in recent months. 

How do condo mortgages differ from conventional mortgages?

Condo mortgages and loans for standard, single-family homes are similar in many ways. For example, a condo mortgage can be a conventional or government-backed loan. However, there are some differences in the process of getting a mortgage for a single-family home versus a condo. These include:

1. Condo mortgages call for additional documentation because lenders screen both the borrower and the condo project. The lender looks at how many units the community has, for instance, and the proportion of owner-occupied to tenant-occupied units, as well as the community's financial footing and insurance coverage.
2. Those extra steps can also cost you more at closing, both in terms of time — it can take longer for the lender to do a thorough assessment — and money, since there could be fees to obtain the documents.
3. Getting financing for a condo might require a higher down payment, depending on the type of loan you get. However, you'll still likely put less money down on a condo because they're generally less expensive than single-family homes.

How to get a condo mortgage

Getting a condo mortgage can be more difficult than getting a loan for a single-family home because your lender considers more than just your personal finances and the property — it also scrutinizes the whole development. Here are some of the basic requirements you’ll need to meet:

• Credit score requirements: A conventional condo mortgage typically requires a minimum credit score of 620. For an FHA loan, you’ll need a score of at least 580 with 3.5 percent down.
• Debt-to-income (DTI) ratio: For a conventional condo mortgage, you’ll generally need a DTI ratio of no more than 45 percent. For an FHA loan, the maximum is 50 percent, and for a VA or USDA loan, it's 41 percent.
• Down payment: Conventional mortgages require a minimum of 3 percent down, while FHA mortgages require at least 3.5 percent, and USDA and VA loans have no set down payment requirement.

When you’re ready to get a condo loan, start by:

1. Reviewing your credit and finances. Your credit score is the primary driver of your mortgage rate, so if it needs work, now’s the time to address it. Likewise, while you don’t necessarily need 20 percent down, the more you can save, the more flexibility you’ll have.
2. Compare mortgage lenders and offers. There are many ways to finance a condo. Doing the legwork can help you uncover the best — and lowest-cost — option.
3. Get preapproved. Once you have a lender in mind, get preapproved. That way, you can make an offer immediately when you find the right property.

What are the different types of condo mortgages?

If you’re planning to buy a condo to live in, you might qualify for one or more of the following mortgage options:

• Conventional loans – 3 percent or 5 percent down, with a 620 minimum credit score
• FHA loans – 3.5 percent down with a 580 minimum credit score, or 10 percent down with a 500 minimum credit score; must be for an FHA-approved condo
• VA loans – No minimum down payment or credit score; must be an eligible service member or veteran; must be for a VA-approved condo
• USDA loans – No minimum down payment or credit score; must be in an eligible location

If none of these options work for you, look into a non-warrantable condo loan. Non-warrantable condos don’t meet the federal operational and/or financial standards required for many types of condo mortgages.

Additional resources for condo mortgages

• 7 tips for buying a condo 
• Are condos a good investment?
• What is an FHA-approved condo?