First Time Home-Buyers are allowed to put 3% down where existing home owners need to put 5% down.
A First Time Home Buyer is defined as someone who hasn’t owned a home in 3 years.
Once again Mortgage Brokers have more agressive loan programs than banks.
One of the advantages of being a mortgage broker like myself vs working at a bank is that we are always privy to the latest and greatest loan programs that offer more leeway or are more aggressive to help the home buyer.
Back in my younger days at the bank, we were always told we needed 25% down on a condo. Nowadays we can get away with much less down payment if the condo is able to pass a full review of certain HOA requirements, especially RESERVE requirements.
It is a Fannie Mae rule that in order to qualify for a low money down mortgage, the reserve requirement for the condo needs to be at 10.00% as well as passing other requirements making sure everything is marketable and warantable.
During the last several months, I have come across a few deals where the ratio comes out to be 8.65% and the loan gets denied. It is a somewhat complicated calculation which I am available to help with.
We have the master list that may open the door for you.
Ultimately, it is the decision of our favorite lender. The good news about this is that we have a plan in place to help our clients avoid a lot of time and money if they are writing a contract on a condo that may or may not qualify. This scenario is not the borrowers fault but normally it takes time and money to get to the answer.
Our favorite source which is the largest wholesale lender in the country has a whole team of experts prepared to get to the bottom of whether or not the condo HOA qualifies. THEY EVEN PICK UP THE BILL until the HOA is approved and you are ready to close. Then at closing you reimburse the fee to the lender for the cost of the condo questionnaire and gathering the budgets, master insurance policies and getting the rest of the questionnaire filled out.
Realtors - If you have customers shopping condos and putting down less than 25%, this is very important. According to the property management companies, this happens a lot at the HOA meetings.
The residents get to vote, fully funded, partially funded or less than partially funded. It is human nature to vote partially funded or less to keep the HOA dues low which sometimes results in a reserve requirement that is less than Fannie Mae standards. (the guideline is 10% but I have seen several deals that failed because the number was 8% to 8.6%.
But if you think long term, having the reserve requirement built into the association dues would allow more people to purchase in the subject community which would ultimately increase demand for units which would ultimately drive prices up for the residents that decide to sell.