Is It Harder to Get a Mortgage on a Condo Than a House?
By Jerry L Kindig III, NMLS #2397823
Condos are a popular first step into owning a home. Buyers ask me a fair question: is it harder to get a mortgage on a condo than on a house?
The short answer is that it's a little different, not necessarily harder. With a house, the lender mostly looks at you and the home. With a condo, the lender also looks at the whole building and the HOA that runs it. Most of the extra steps come from that second check.
What's going on in the condo market right now
Condos are getting a lot of attention this fall. Redfin's fall 2026 condo report found that condo sellers outnumbered buyers by more than two to one in September, the widest gap in at least 13 years of its data. The national median condo sale price slipped 0.8% from a year earlier, and about 37% of condos that sold had a price cut along the way.
Redfin points to rising HOA fees, insurance costs, and special assessments as big reasons buyers are holding back, especially in Florida and Texas. For buyers who can handle those costs, that can mean more room to negotiate.
Why lenders look at the building, not just you
When you buy a condo, you own your unit plus a share of everything else: the roof, the pool, the parking garage, the hallways. If the HOA is short on money or the building needs major repairs, that affects every owner, and it affects the lender's risk too.
So on top of the usual credit, income, and asset review, the lender reviews the project. That usually means the HOA fills out a condo questionnaire, and the lender looks at the budget, the insurance, and sometimes board minutes or an inspection report.
What makes a condo "warrantable"
You'll hear lenders use the word warrantable. It just means the condo project meets the rules for a conventional loan that Fannie Mae or Freddie Mac will buy. Fannie Mae's Selling Guide lists the kinds of projects that don't qualify. A few of the common ones:
- Too much ownership by one investor. In a project with 21 or more units, one person or company generally can't own more than 20% of the units.
- Too much commercial space. No more than 35% of the project or building can be commercial or mixed-use.
- Pending lawsuits about the building's safety or structure. Some minor lawsuits are OK, but ones tied to safety or soundness are a problem.
- Critical repairs that haven't been fixed. Think structural problems, serious water leaks, or a failed safety inspection.
- Buildings run like a hotel. Projects with things like a front desk renting units nightly or mandatory rental pools are out.
If a project lands on that list, it's called non-warrantable. That doesn't mean you can't buy there. It means you'll need a different kind of loan, which I'll get to below.
A reserve rule change coming in January
Here's one that's flying under the radar. Under Fannie Mae's Lender Letter LL-2026-03, starting with loan applications dated on or after January 4, 2027, condo projects that go through Fannie Mae's full review will generally need to set aside at least 15% of their annual budgeted assessment income for replacement reserves. Today that minimum is 10%.
There's an alternative. A project can still qualify with a lower number if it has a current reserve study and funds its reserves at the highest level that study recommends. Fannie Mae also notes on its condo resource page that the 15% is a minimum standard, not a fee it charges.
What it means for you as a buyer: some HOAs may raise dues to build reserves, and a building that's underfunded could have trouble qualifying for conventional financing. If you're shopping for a condo now, ask about the reserve budget early.
FHA and VA condo loans work a little differently
If you're using an FHA loan, the condo project generally needs to be FHA-approved. If it isn't, HUD allows a Single-Unit Approval for some units, as long as the project is complete, has at least five units, and meets a smaller set of HUD's requirements, including limits on how many units already have FHA loans.
VA loans have their own condo approval process too. Either way, it's worth checking the project's status before you fall in love with a unit. Not sure which loan fits you best? Our FHA vs. conventional comparison lays out the differences.
HOA dues count toward what you qualify for
This is the part that surprises people. Your monthly HOA dues get added to your housing payment when the lender figures out what you can afford, right alongside principal, interest, taxes, and insurance. Higher dues mean a smaller loan amount for the same income.
You'll also usually need your own walls-in insurance policy (often called HO-6) for the inside of your unit, since the HOA's master policy typically covers the building, not your cabinets and floors.
To see how dues and insurance change your monthly cost, plug them into our mortgage payment calculator. For the big-picture budget, read how much house you can actually afford.
What if the condo is non-warrantable?
You still have options. Some lenders offer loans that are designed for condos that don't meet Fannie Mae or Freddie Mac rules. These non-QM loans often have different down payment and pricing terms, so it pays to compare. As a broker, I can shop more than one lender to see who will finance a specific building.
Tips before you make an offer on a condo
- Ask for the HOA budget and reserve info early. Your agent can often get it before you're under contract.
- Ask about special assessments, both current and planned.
- Find out if the project is FHA- or VA-approved if you plan to use one of those loans.
- Get pre-approved with the condo in mind. Make sure your lender knows you're shopping for condos so HOA dues are part of the numbers. Here's what to gather: documents needed for pre-approval.
FAQ
Is it harder to get a mortgage on a condo than a house?
Not always. You'll go through the same personal review as with a house, plus a review of the condo project. If the building checks out, the process can be very similar.
What is a warrantable condo?
It's a condo in a project that meets Fannie Mae or Freddie Mac rules, so it can be financed with a standard conventional loan.
Can I get an FHA loan on a condo that isn't FHA-approved?
Sometimes. HUD's Single-Unit Approval can work for some units in completed projects with at least five units that meet HUD's requirements.
Do HOA fees affect how much I can borrow?
Yes. Lenders count your monthly HOA dues as part of your housing payment, which affects how much you qualify for.
What changes for condos in January 2027?
For loan applications dated on or after January 4, 2027, Fannie Mae will generally require condo projects under full review to budget at least 15% of assessment income for reserves, up from 10%, unless they qualify through a reserve study.
Thinking about a condo? Let's check the building first.
If you've got your eye on a condo, send me the address before you write an offer. I'll help you figure out which loan fits the building and what the HOA dues mean for your budget. You can browse our loan programs, visit our first-time buyer page, or reach out through our contact page.
Not all clients will qualify for these products. Eligibility and availability vary by program and borrower. This article is for general information only. It is not a commitment to lend or an offer of credit. Condo project eligibility, down payment, and loan terms are subject to credit approval, underwriting, and property and project eligibility. Rates and programs change daily.
Neither the Loan Originator nor Loan Factory, Inc. is a government agency or is affiliated with, endorsed by, or acting on behalf of the U.S. Government, the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA), or the U.S. Department of Agriculture (USDA).
Jerry L Kindig III, NMLS #2397823 | Loan Factory, NMLS #320841 | Equal Housing Opportunity
