Condo or townhome? It makes a difference when financing

Yesterday, I wrote about the rising prices of condominiums and townhomes. In keeping with the condo/townhome theme, today I’d like to pass along some information that was sent to me by one of my lender contacts at New American Mortgage [however, I see that First Centennial Title Company is referenced in the article, so perhaps this information came from them.] At any rate, if you are considering financing your condo or town home purchase, you may find the following information regarding lending guidelines on such property types useful.

What is the difference between a condominium and a town home?

A buyer of a condominium owns his or her individual unit, plus a percentage of the surrounding property, including land and any amenities on the property. (The word “condominium” is Latin, meaning “common ownership” or “common control.”) Residents are members of a homeowners’ association and pay a monthly fee to the association in exchange for maintenance of the common property. Each condominium complex has a master deed which outlines the percentage of ownership each unit in the development has invested in the entire complex. That percentage determines residents’ monthly dues to the association.

A buyer of a townhome purchases his or her individual unit, as well as the ground underneath that unit. Each townhome has its own roof, in contrast to condominiums. Townhome residents also typically belong to a homeowners’ association and pay monthly fees in exchange for the general maintenance of common outdoor areas. Townhomes occasionally come with such single-family home amenities as garages and backyards (albeit small backyards), for which owners generally are responsible for maintaining.

It is very important when listing a property to identify it correctly.  If it is a condominium it must meet specific guidelines be approved for financing by FHA, VA or Fannie Mae. If it is a townhome there are no restrictions and it is the same as getting a loan on a single family residence or a Planned Unit Development.  To see if a complex is on the approved list with FHA you can use the links below:

Even if the complex  is on the list as approved  a condominium certificate will be obtained during the financing and the complex must still meet the requirements to qualify. If you are not sure what the property is you can call customer service at First Centennial Title Company (775) 689-8510 or any title company you work with and they can help you clarify what type of property you have.


About Guy Johnson

I am a licensed Nevada REALTOR® living and working in Reno, Nevada. Give me a call at 775-722-4011. My team and I will be happy to assist you with your real estate needs.
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