Financing a Condo

The condo association or elected board in some buildings may require larger down payments when financing a condo to hedge against default. They usually require larger equity positions in purchases to protect communal assets. The reasoning is that if a buyer has a substantial amount of equity in the unit, they are less likely to default on their mortgage. Defaults lead to missed payments of association dues which causes financial burdens on the rest of the unitholders and jeopardizes the building’s budget.

Some condo associations require a 20% down payment. If you’re looking to purchase a condo, be sure to check with the Association to see if they have imposed a minimum down payment requirement. They may also have a minimum credit score for purchasing. You don’t want to get under contract to purchase a condo and pay for an appraisal and inspection, just to find out that you can’t purchase in the building. Don’t waste your time and money, find out about down payment and credit score requirements upfront. If you’re struggling to save for a down payment, consider down payment assistance programs.