In a tight housing market, the variety of condos out there can be quite a surprise. Depending on the size of your household and the age of everyone in the home, a condo can be a terrific choice. However, there are a few differences when it comes to financing.

Condo Payments Are Lower but Watch the Fees

When figuring out how much house can I afford with a VA loan, the lower payments on condos can be very appealing. You can enjoy plenty of square footage for less money each month.

However, you will also have monthly HOA fees that will need to come out of your monthly budget. These fees can often cover some nice amenities, including

  • tennis courts
  • playgrounds
  • pools
  • an on-site gym

If you are not going to use these amenities, the benefits may not be worth the monthly fee.

Insurance Can Be Cheaper

Depending on the condo contract, you will likely only need to insure your possessions. HOA fees should cover the insurance on your roof, siding, and windows. Be aware that upgrading windows will likely fall on the homeowner, but breakage from the outside, such as that caused by storms, should be covered by your HOA insurance.

Exterior Maintenance is Someone Else’s Job

The HOA will likely take care of exterior maintenance. If you live in an area that gets a lot of snow, you may also enjoy opening up your garage door and noting that someone else cleared your driveway!

For those in the military, knowing that someone is maintaining the exterior of your home if you have to be away for an extended period of time can be comforting.

Buy With an Eye to Selling

Carefully check out the community to make sure that there are not a lot of units open when you’re shopping. A poorly managed community can make life rough for residents, and banks may not want to lend in that situation. Because legal problems in such a community can drag on for a while and do a lot of damage to your ability to sell, review any postings of legal action against the HOA board.

You may also want to think about buying a bit bigger than you need. The push to work from home means that a one-bedroom condo may be harder to sell than a two-bedroom; even if you live alone, if you don’t need that much space, size up your purchase if possible to make things easier when it’s time to sell.

Check Your Options to Sublet

There are many HOAs that don’t allow condo owners to rent out their properties, but the rules on that can change. Because you will be sharing walls instead of fences with your neighbors, living next to an Airbnb or VRBO that is rented out to parties will get old pretty quickly.

However, if you need to rent out your home for a specific period of time, that rental option can be helpful. Review your HOA restrictions and guidelines to make sure that you have both flexibility and rules so you can enjoy a quiet life at home and the flexibility to earn cash on your investment when needed.

About the Down Payment

Before you go house shopping, check with your lender about any differences in

  • down payment requirements
  • interest
  • balloon options

As a general rule, condo down payments need to be a bit bigger, and rock bottom interest rates are more available in a single-family home than in a condo. However, if the region where you’re buying has a lot of condos for sale and few homes, banks in that area may have more flexibility to lend, especially as your loan is backed by the VA. Get your pre-approval parameters established before you start shopping to avoid being disappointed should you find an ideal home.

The real estate market evolves continuously, and many lenders can offer you more choices than ever before. Control what you can by working on your credit, building up your down payment, and checking out the mood of the community before you buy a condo.

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