Down payment for condo

[Sky Lin]

Hi, BP. I am in Phoenix AZ.

I am trying to buy a condo in Phoenix area for short term rental. Property price is $125,000.

How much do I need to put down?

My credit score is 740 and up

My lender told me it is easy to qualify for single family house, but it is tough to qualify for condo. In that case I have to put between 20%-25% down for easier getting the loan approved. What do you think? Do I have put that much?

I want to buy more. Or I should change a lender?

[Don Konipol]

@Sky Lin

There are guidelines as to the % of owner occupants in a condominium complex that must be met for a originator to be able to sell the loan in the secondary market. If the Condo complex doesn’t meet that standard, the only lenders would be portfolio lenders or lenders who resell to secondary note investors who purchase non conforming loans. All at a higher interest rate with more points and fees.

In the 2011-2013 period I purchased 5 high end condos in Phoenix area, four of which were not financeable due to not meeting owner occupant guidelines. I paid cash for those and received a large discount. When the HOAs were able to meet o/o guidelines 5 years later I sold three of them for gains of 60%+