Chicago Condominium Mortgages – The Difference Between Full and Limited Review
Many home buyers in the greater Chicago market are surprised to learn that the condo that they are purchasing must go through an approval process similar to the approval process the borrower must go through. Condominiums are reviewed for financial strength, overall management and general risk. If a lender finds too many issues with a condominium, they may be unable or unwilling to provide financing.
If a purchaser is putting down 20%, their loan may qualify for a Limited Review of the condominium through a Fannie Mae loan program. A Limited Review is a much easier process than a Full Condominium Review. For a Limited Review, the lender only needs to confirm the following:
– The condominium is not an ineligible project (live-work, house boat, timeshare, etc.)
– The project does not consist of manufactured home
– The condo building is 100% complete
– The project is not subject to additional phasing
– The HOA has been turned over to the unit owners
– The project is not involved with any litigation
Although there are some additional requirements of a Limited Condominium Review, this covers many of the important factors for approval. In addition, Freddie Mac offers a review process for condominiums that is similar to Fannie Mae’s Limited Review process. They call it a Streamlined Review. One big advantage for the Freddie Mac program is that it only requires a 10% down payment as opposed to a 20% down payment.
In some circumstances, a Streamlined or Limited Review may be the difference between getting approved or denied for a mortgage. For further clarification on Chicago condominium lending requirements, please contact us below.