The Quick Read: A conventional condo loan needs two approvals, one for you and one for the building. You can buy with as little as 3% down on a primary residence, but the condo project has to pass its own review first. A strong borrower can still be turned down if the building’s finances, insurance, or ownership mix fail the test. All of this is subject to lender guidelines and full file review.
Most buyers spend weeks on their own credit and savings. Then they learn the building matters just as much. This guide walks through both sides, step by step.
Key Takeaways
- A low-down-payment conventional loan on a condo is judged on you and on the project.
- On a primary residence, leverage reaches 97% for a first-time buyer and 95% for most other buyers.
- Mortgage insurance applies above 80% loan-to-value and can come off later.
- The building’s reserves, unpaid dues, insurance, commercial space, and litigation can sink a loan.
- Check the building before you fall for the unit.
Conventional payment estimate
The starting figures are an example price at the first-time buyer’s minimum down payment. Replace them with yours.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a conventional loan quote.
Estimate seeded at the low end of Fannie Mae’s published range (0.58%–1.86% a year); the insurer prices the actual premium on the score and the leverage. Applies only above 80% loan-to-value.
Illustrative starting assumptions: a $350,000 price, the first-time buyer’s minimum down payment, a thirty-year term at the current Freddie Mac benchmark, mortgage insurance at the low end of Fannie Mae’s published range, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a conventional loan quote; your rate is set by the lender at lock. The mortgage insurance figure is an editable estimate seeded from Fannie Mae’s published typical range, not a premium quote; the insurer prices the actual premium, and the cancellation month assumes scheduled payments with no extra principal and no change in value. Taxes, insurance and dues are editable estimates; closing costs are not included. Conforming loan limits apply by county. Licensed in sixteen states for consumer mortgages.
What Is a Conventional Condo Loan, Exactly?
A conventional condo loan is a standard mortgage that follows Fannie Mae and Freddie Mac guidelines, used to buy a unit in a condominium. You own the unit. You share ownership of the walls, roof, and grounds through a homeowners association (HOA). Because those shared pieces back your loan, the lender looks at the whole building.
That is why condo files read differently from house files. With a house, the lender checks you and the home. With a condo, the lender checks you, the unit, and the association that runs the place.
Lendmire’s conventional loan programs are arranged through wholesale lenders, and the mechanics below match how those files are built. Lendmire is a mortgage broker, not the lender, so every figure here depends on the lender’s guidelines and a full review of your file.
The Borrower Side: What You Need With Little Down
On a primary residence, one-unit purchase leverage runs to 97% loan-to-value (LTV) when at least one borrower is a first-time buyer. LTV is the loan amount divided by the home’s value, so 97% means 3% down. A first-time buyer here means no ownership interest in a home during the previous three years. Everyone else generally tops out at 95% LTV, or 5% down.
Here is how the borrower pieces fit together across the wholesale programs these files go through:
| Factor | Typical requirement |
|---|---|
| Leverage, first-time buyer | Up to 97% LTV, fixed rate |
| Leverage, other buyers | Up to 95% LTV |
| Credit score | 620 decision score as a floor |
| Debt-to-income | Up to 50% on an automated approval |
| Mortgage insurance | Required above 80% LTV |
The 620 floor is the lowest point on the wholesale menu. Some lenders set a higher bar. The automated underwriting finding governs most files, and it can approve a ratio up to 50%. A manually underwritten loan uses tighter ratios, 36% or 45%, plus reserve and score factors.
Your debt-to-income ratio includes the HOA dues. This catches buyers off guard. Dues count toward your monthly obligations even though they never reach the lender. A building with high dues can squeeze your ratio before the lender looks at anything else.
There is also an income-limited option. Fannie Mae’s HomeReady program allows a 3% down payment and caps borrower income at 80% of area median income. It does not require a first-time buyer. Freddie Mac’s Home Possible carries a similar income limit. If your income is under the cap, these are worth asking about. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
One occupancy note. These leverage levels are for a home you live in. Second homes top out at 90% LTV. Investment property drops to 85% on one unit. Occupancy decides the leverage, and this guide stays on the home you live in. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
How Mortgage Insurance Works With a Low Down Payment
Mortgage insurance is required on any conventional loan above 80% LTV. It protects the lender, not you, and you pay for it through a monthly premium. Published typical annual premiums run from 0.58% to 1.86% of the loan balance. That is a range, not a quote. Your credit score and LTV drive where you land. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The good news: it comes off. On borrower-paid mortgage insurance, you may request cancellation when your balance reaches 80% of the original value. You need a good payment history, no second liens, and no decline in the home’s value. The servicer must end it automatically at 78%. Fannie Mae also points out that HomeReady’s insurance can be cancelled, unlike FHA mortgage insurance in many cases.
The Building Side: Two Words That Matter, Warrantable and Established
A “warrantable” condo is one that meets the agencies’ project standards, so a lender can sell the loan to Fannie Mae or Freddie Mac. A non-warrantable condo fails at least one test. Conventional lenders generally cannot place a standard low-down loan on it.
Before testing the finances, the lender classifies the project. Under Fannie Mae’s project standards, an established project has these traits:
- At least 90% of units sold to buyers.
- The project is fully built.
- No further phases remain.
- Control of the HOA has passed from the developer to the owners.
Anything short of that is a new project, and new projects face stricter rules. At least half the units generally need to be sold or under contract to people who will live in them, as primary or second homes. The unit also has to sit in a substantially complete project or legal phase, shown by a certificate of occupancy or similar document.
What Lenders Check in the Building
This table shows what gets reviewed, why it matters, and how you find out.
| What the lender checks | Why it matters | How you find out |
|---|---|---|
| Unpaid HOA dues | Owners behind on dues starve the budget | HOA questionnaire |
| Replacement reserves | Cash for roofs, elevators, and repairs | Budget or reserve study |
| Commercial space | Too much shifts risk away from housing | Project documents |
| HOA income sources | Too much non-dues business income is a flag | Budget |
| Insurance | Master policy must meet agency standards | Insurance certificate |
| Litigation | Pending suits can threaten the budget | Questionnaire |
| Transient use | Hotel-style operation can disqualify the project | Rules and questionnaire |
Here is how the numbers work in the agency guides. Freddie Mac allows no more than 15% of units to be 60 or more days behind on HOA assessments. Fannie Mae’s ineligible-project rules include more than 35% commercial or mixed-use space. They also flag an HOA that earns over 10% of its budgeted income from non-incidental business arrangements.
Some traits can disqualify a project on their own. Timeshare or fractional ownership is one. Hotel-style operation is another. Failing a required structural-safety inspection is a third. One such characteristic alone makes a project ineligible.
Reserves deserve extra attention. The reserve is the HOA’s savings account for big repairs. Lenders look at how much of the association’s budget goes into it. The required floor is under revision, and which standard applies can depend on your application date. Ask your loan officer which version covers your file.
How a Low Down Payment Changes the Building Review
Here is the part most guides skip. A small down payment does not change the building’s tests on paper. In practice, it changes how much scrutiny the file gets.
With 3% or 5% down, the lender is exposed to more risk if the building struggles. Across the wholesale programs these files go through, low-down condo purchases tend to land on the fuller review path. That means a questionnaire, the budget, the insurance certificate, and often a reserve study. The lender reads all of it.
That has three practical effects:
1. More paperwork from people who are not you. The HOA or its management company supplies most of it, and their pace is not under your control.
2. A thinner margin for error. A building near a limit, such as unpaid dues just under the cap, can tip over before your contract closes.
3. A review that expires. Freddie Mac, for one, requires reviews of established projects to be within one year before the Note Date. New-project reviews carry their own timing requirements. A stale approval may need updating.
Build room into your contract’s financing deadlines. Ask for the HOA documents as soon as you are under contract. Better yet, ask before you make an offer.
Step by Step: From Offer to Closing
1. Get pre-approved with the condo in mind. Tell the loan officer you are buying a condo. Program choice depends on first-time status, income against area median income, and occupancy.
2. Pick the unit, then ask about the building. Request the HOA budget, the reserve study if one exists, the insurance certificate, and the owner-occupancy and delinquency counts.
3. The lender classifies the project. Established, new, or a type that may be exempt from review.
4. The lender runs the project review. The questionnaire goes to the HOA or manager. The lender tests reserves, delinquencies, insurance, commercial space, and litigation.
5. The appraiser reports on the unit and the project. Appraisal rules vary by program and leverage.
6. Underwriting weighs both files together. Your credit, ratios, and assets on one side. The building on the other.
7. Loan Estimate and Closing Disclosure. These are the standard consumer disclosures, and they apply to this loan like any home purchase.
Steps three and four are what make a condo different from a house. Everything else looks familiar.
Where the General Rule Breaks
The tests above are the general rule. Here are the named exceptions and traps.
Small projects and detached units. Fannie Mae waives project review for detached condo units and for two- to four-unit condo projects. Freddie Mac’s “Exempt From Review” category covers similar ground. Treatment of five- to ten-unit buildings depends on whether they sit in a larger development or master association. The Fannie Mae condo FAQ lays out the details. “Small buildings always pass” is a myth.
Lighter review is shrinking. The streamlined review path for established buildings is being phased out, with the change tied to application dates. More files now need full financial documents. A building that passed before may not pass now.
A past approval is not a current one. A building approved for the last buyer can fail for you. Fannie Mae can mark a project Unavailable in its approval system when it learns the project does not comply. Reviews also age out.
FHA approval does not carry over. Buildings on the FHA list can support a conventional loan on an established project. They cannot on new or newly converted projects.
Critical repairs and special assessments. A project that needs critical repairs, or sits under an evacuation order, cannot qualify until the problem is resolved. A likely future special assessment can enter that call. Special assessments are one-time charges the HOA bills owners, usually for a big repair.
Refinances. Some refinances get a lighter project check. Rate-and-term refinances at 95% LTV on a one-unit primary residence follow their own limits. The 97% refinance option generally requires an agency-owned existing loan. Condo projects with 11 or more attached units can still face a critical-repairs check.
Lender overlays. An overlay is a lender rule stricter than the agency rule. Some lenders limit how many units can be investor-owned, or set higher score floors. Two lenders can answer differently on the same building. Ask your loan officer to check with more than one wholesale lender when a building is close to a line.
Recent credit events. The agencies set waiting periods: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
A Scenario: Same Buyer, House Versus Condo
Picture a first-time buyer with a 700-range credit score and steady traditional employment income, putting 3% down. The price is the same for a house and a condo. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
On the house, the lender checks the buyer, the appraisal, and title. Debt-to-income lands comfortably under the 50% automated ceiling. The loan moves along.
On the condo, the buyer’s numbers are identical. But the lender also needs the questionnaire, the budget, and the insurance certificate. The questionnaire shows 12% of owners behind on dues. That is under Freddie Mac’s 15% limit, so the building clears. Then the budget shows a thin reserve line, and the lender asks for more documents. The buyer’s file never changed. The building decided the outcome.
Now suppose dues are high and the ratio nears the ceiling. The buyer could look at a building with lower dues, or ask about HomeReady if income qualifies. That is the shape of the decision.
What If the Condo Fails?
A failed review does not always end the deal. Here are the options, roughly in the order worth trying.
- Ask what failed. Some failures are fixable, such as a missing document or a stale review.
- Ask for a second lender’s read. Overlays differ, and so do review methods.
- Look at whether an exemption applies. Detached units and very small projects can skip the project review.
- Wait for the HOA to fix the issue. If delinquencies drop or the reserve gets funded, a re-review may pass.
- Move to a different building. Sometimes this is the cleanest answer.
- Rethink the loan type. FHA and VA have separate condo approval lists, with their own rules and costs.
If you are self-employed and your income documents do not fit the standard mold, Lendmire’s piece Self-Employed Mortgage vs. Conventional Loan With Low Down and No PMI covers how the options differ.
The resale angle matters too. A building that fails conventional standards shrinks the pool of future buyers who can finance it. That is a risk to your own exit, not only to your approval.
How to Check a Building Before You Make an Offer
Do this first. It is the best use of an afternoon.
- Ask the listing agent or HOA manager for the current budget and the reserve study.
- Ask how many owners are behind on dues, and whether any special assessment is planned.
- Ask whether the association is in any lawsuit.
- Ask what share of the building is owner-occupied, and whether any units run as short-term rentals.
- Ask for the master insurance certificate.
- Ask whether the building has any commercial space and how much.
Then hand the answers to your loan officer before you write the offer. Five minutes of review can save a failed contract.
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the home’s value. A 97% LTV means 3% down. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Warrantable condo: A condo project that meets the project standards of Fannie Mae and Freddie Mac, so conventional loans can be placed on its units.
Reserves: The HOA’s savings for large repairs, funded through monthly dues.
Special assessment: A one-time charge to owners, usually for a major repair the budget cannot cover.
Overlay: A lender rule that is stricter than the agency rule.
Mortgage insurance: A premium required above 80% LTV that protects the lender, and that can be cancelled as you build equity.
Project review: The lender’s check of the condo building’s finances, insurance, and ownership mix, separate from your own file.
Frequently Asked Questions
Can I buy a condo with less than 20% down on a conventional loan?
Yes. On a primary residence, leverage can reach 97% for a first-time buyer and 95% for most others. You pay mortgage insurance above 80% LTV. The building must also pass project review. Terms depend on lender guidelines and full file review.
Does the condo need FHA or VA approval for a conventional loan?
No. Conventional loans follow Fannie Mae and Freddie Mac project standards. FHA approval can help support an established project, but it does not work for new or newly converted projects. VA and FHA keep their own lists with their own rules.
Do all 3%-down conventional loans require a first-time buyer?
No. The standard 97% option requires at least one first-time buyer. HomeReady does not, but it caps income at 80% of area median income. Freddie Mac’s programs split the same way. Ask which one fits your income and history.
Does mortgage insurance stay for the life of the loan?
Not on a conventional loan. You may request cancellation at 80% of the original value, with a good payment record and no second liens. FHA works differently, and the rules are not the same.
What happens if a building was approved before but fails now?
Your loan cannot rely on the old approval. Reviews expire, and agencies can mark a project Unavailable if it no longer complies. The lender reviews the building as it stands at your application. Ask for a fresh review early.
Where This Leaves You
If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Start with the building, and ask the questions before the offer.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
2. Fannie Mae Selling Guide: General Information on Project Standards
3. Freddie Mac Guide, Section 5701.5
4. Fannie Mae Selling Guide: Ineligible Projects
5. Freddie Mac Guide Section 5701.2
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Cash Out on a Refinance With a Conventional Loan? · Does a Conventional Loan Let You Take Cash Out When You Refinance? · Conventional Cash-Out Refinance for Owners Unsure Their Loan Qualifies
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.