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There are many variables to consider when deciding between a condo and a Single Family Residence; in many cases the monthly Condo Assoc Fee will reduce your buying power considerably; besides the fact that a condo must be on the FHA approved list to utilize FHA Financing on the purchase of said condo.I can understand the allure of FHA financing, because you are not penalized for small drops in credit score the way you are with Conventional loans. Also consider the fact that if you don't have 20% down, obtaining PMI in CA has also become a problem for lenders.I suggest you look at FHA to minimize your down-payment, and have a discussion with your loan officer to see where you qualify (max monthly payment), and compare that to where you would like to be.
The only reason you would need an FHA loan is because your credit history or your income is not strong enough for private mortgage insurance for a conventional loan. It has nothing to do with the down payment. If you can find a home that fits within your budget it will be better than a condo. Condo's are not that easy to loan on right now. The HOA dues on the condo will also lower your purchase price limit since the HOA payment will be counted towards your total monthly payment.
Condos can have several issues that single family don't have such as shared walls & the potential for special assessments. You may buy a condo that has loud neighbors to the side, above or below you. If the structure has issues, you may have to pay a special assessment for the condo association to fix it. Single family homes can have issues too. Ask some realtors about potential re-sale issues with condos as well.
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