Condo, Townhome, or Single-Family Home: What Changes for Your Loan
By Mark Jost, NMLS #150914 · Published
Many buyers in Nashville and Franklin are deciding between a condo, a townhome, and a single-family house. All three can work with a mortgage. But the loan steps are a little different. Here is what I tell my buyers.
Single-family home
This is the simplest path. The lender looks at you, the home, and the appraisal. Some neighborhoods have a homeowners association (HOA), so ask before you fall in love with a house.
Condo
With a condo, you own your unit, and the building is shared. So the lender often reviews more than your unit. The group that runs the building matters too. If you want an FHA loan, HUD says the condo project must be approved before an FHA loan can be processed for a unit in it. HUD has a public search page where you can look up a project. If a project is not on the approved list, ask me about other options early, before you write an offer.
Townhome
A townhome often sits in the middle. Some townhomes come with an HOA that cares for the outside, the roof, or shared spaces. Some are set up like a condo. Others are not. The paperwork tells the story, so ask your agent for it early.
HOA dues are part of your monthly cost
The Consumer Financial Protection Bureau says HOA and condo dues are usually paid straight to the association, not in your mortgage payment. But they are still part of what you pay each month to own the home. The CFPB says to count them when you decide what you can afford. Dues can change over time, so look at the budget the HOA keeps.
Look at the HOA's savings
Fannie Mae explains that part of HOA fees should go into a reserve fund. That is like a shared savings account for big jobs, such as a new roof. It also says to read the HOA's financial statements before you buy. Some HOAs charge a special assessment, which is a one-time bill for a big repair. Ask if one is planned.
Questions to ask before you make an offer
- How much are the dues, and what do they cover?
- Does the HOA have a reserve fund?
- Are any special assessments planned?
- Does the HOA carry insurance for the building, and what do I need to cover myself?
- For a condo, is the project approved for the loan I want?
The easy rule
Call me before you start touring. Then we can plan the monthly cost and know which homes fit your loan. If you are buying in Nashville, Franklin, Brentwood, or anywhere in Middle Tennessee, I am glad to help.
Sources
- CFPB: Are condo/co-op fees or HOA dues included in my monthly mortgage payment?
- CFPB: Figure out how much you want to spend
- HUD: FHA Condominiums search
- HUD: FHA Connection condominium help
- Fannie Mae: What you need to know about your HOA
This article is general information, not a loan offer or legal advice. Every loan depends on credit, income, and property review. Mark Jost, NMLS #150914. Heathrow Mortgage, Company NMLS #1849599. Equal Housing Opportunity.