Tips When Buying a Condo

When buying a condo, researching the HOA is very important. The HOA (home owner's association) controls the rules and finances of the entire condo development. If you plan on getting an FHA loan to buy your condo, the very first thing you need to do before you even submit an offer, is to have your lender check to see if the condo association is FHA approved.  HOAs need to apply with the Department of HUD in order to be eligible for FHA financing.  HUD looks at the ratio of owner occupants vs. renters and at the association's reserves amount. If it is not FHA eligible, talk with your lender about a 5% conventional loan or call a local bank to see if you can get a portfolio loan. After you have gone under contract, you need to purchase the HOA docs so you can know what the rules, regulations, and financials look like.  You don't want to live in an association that is in debt. You need to know if you can have pets, what maintenance you are required to cover, if the HOA pays your water, etc.  It is also ideal to get a copy of the last couple of HOA meeting minutes to see what the neighbors have been complaining about and what future plans the association has. Your contract should allow a time period for you to review these documents and cancel the contract if you need to based on this information.

The HOA usually has insurance on the exterior of the building which means from half of the wall stud out to the exterior.  You need to purchase insurance for half of the stud, in. To determine the value, think about what it would cost to rebuild your condo if it burnt down.  Include carpet, drywall, cabinets, fixtures, and your personal items.

  • May 19 2012 - Westminster
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Answers (2)

HOA usually refers to a home owner's association, meaning single family homes in a deed-restricted community.  The term you should be using is condo association.
  • May 19 2012
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David you are incorrect

Definition of 'Homeowners Association Fee - HOA Fee'

An amount of money that must be paid monthly by owners of certain types of residential property to an organization that assists with maintaining and improving that property and others in the same group. HOA fees are almost always levied on condominium owners, but they may also apply in some single family neighborhoods.   
  • May 19 2012
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