Why is is harder to get a loan for a condo than a house? Are the rates higher too?

There are several reasons pricing is higher, and approvals are a little harder. Compared to a home where you are buying the land AND the building, with a Condo, all you are buying is a right to use the space within your unit. With that you get the right to share in the use of common areas of the project. The Association actually owns the Building. So, the risk to the lender is higher. The higher the risk, the higher the pricing. Why is the risk higher? Well, the association must make sure that they collect enough money to cover the cost of maintenance of the property, Fire insurance and taxes on the common areas. The HOA assessments are usually higher so that eats into the borrower's debt-to-income ratio. Also, if the bank ends up owning the unit due to foreclosure, it is harder for them to unload the property, resulting in having to deep discount on the unit just to get rid of it. Now I cannot speak for all markets, but historically, Condo's have appreciated at a much slower pace than traditional homes and even townhomes, making them less desirable from an investment perspective. ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in Arizona, California, Georgia, Oregon, and Washington. Need help in other states? We've got you covered. NEXA Mortgage is licensed in 46 states ~ www.ApplyYes.com 480-889-9000.

Unfortunately condos are a little higher in rate. The risk is higher then a single family residence. There is more risk because of maintenance & the HOA is responsible for making those payments. They also don't appreciate in value the much as a single family residence.Nancy RelefordHome Equity Mortgage, LLCMurfreesboro, TN. 37129615-867-3060

As with so many other things in life, it isn't about you personally - it's about everyone else. Bert gave a good answer, but expanding on that with this example you only need to look back to the housing collapse years. You may have been financially OK, but let us assume 15% of your fellow condo owners were not. These folks were not paying their mortgage or associations dues. The association quickly got into financial trouble for lack of monthly association dues, and those other units became foreclosures, driving down the value of your Condo. This is just one example of additional risk on Condo's, and why they make be a little harder to qualify, and why the interest rate is indeed slightly higher than a single family home. I lend in MN WI IA SD ND. Find me at FirstTimeHomeBuyer-MN.com - NMLS274132