FHA vs Conventional mortgage

I'm sure you understand why condos do that so good luck in your search.

Odds are not very good with anything under 20% for conventional.

I found this where I got my loan 6 months ago.

"The maximum LTV and CLTV for condominiums is 70% in all states."

I'm sure you may find one. But you will pay an ass ton for it. No telling what rate and costs would be thrown at you which really defeats the purpose.

Save up for 20%. That's the only sure way.

From a search

"Some lenders will consider alternate trade lines. Often, these are monthly bills such as your power bill, water and sewer bill, telephone bill, etc.
If lack of credit is a problem ask you preferred mortgage professional about using alternate tradelines."

I would say look at other lenders and save up for that 20%. Avoid that extra cost of insurance will pay off.

Quote from Damix : Hi, Looking to buy my first condo, spoke with a BoA rep about preapproval. After running my credit and looking over my situation, they informed that I only qualify for FHA for 2 reasons. 1) I am only putting 5% down. 2) I need 3 open trade lines with at least 12 months history for a conventional loan (if I put less then 20% down) as apposed to FHA where you need 3 trade lines with 12 month history (open or closed). Now that I've started my condo search, I've noticed that many of the places I look at are not FHA approved, so I'd like to see if there is any way I can get a conventional loan. I've spoken with a few people and they said smaller lenders will some times allow you to put 5% down on conventional loans, my only question is if the 2nd problem is something that can be overlooked or if it is a Freddie/Fannie issue here. When the BoA rep pulled my credit, all came back between 780-800, so that should help my case (I believe). If there are any other solutions, or if you need more info, just let me know. Thanks, Damix

Damix,

I do many more Condos with conventional financing compared to FHA as most condos are not FHA approved. Depending on what State the property is located, many times I receive what is called a Fannie Mae Limited Review for Condos where not a lot is needed either.

We do look for 3 pieces of established credit (>12 months each), and yes, with FHA you can get a manual Underwrite with 'alternate credit' I add to your report (i.e. telephone, utilities, auto insurance, etc) and that works out fine as long as you are within FHA manual underwriting guidelines.

On conventional however it is not as easy with limited credit as there is no manual underwrite process and everything works off the automated approval and conventional guidelines.

Guidelines are not written in stone and exceptions for certain factors are granted on a case by case (and lender by lender) basis. I have many lenders and each of them have their own comfort levels with various exceptions. In respect to your limited credit, how many pieces of credit do you have?

Condo LTV guidelines now vary depending on the State. While guidelines go up to 97% LYV many areas are restricted to between 75-80% LTV. Again, each case is different.

Finally, while I know you are talking about putting 5% down; keep in mind that, depending on the scenario, that you may be able to structure the loan with a seller's concession towards closing costs. This is quite customary and, again depending on the specific scenario, can lead to you seeking a 90% LTV loan as your other costs may be covered by the sellers concession.



Feel free to PM me with your specifics.
-Adam

Adam - I appreciate the reply and information. I'll continue working with my realtor to see if there are other lenders that have different criteria.

Thanks.

I do have lenders who are more lienient about limited credit. I have been in the industry 19 years and my Company is licensed in 12 States and as you can see in my various posts throughout the Finance Forum I am happy to provide information to everyone in all States. I am not looking to self promote within the Forums so please feel free to PM me if you have any specific questions regarding your scenario that I may help you with. -Adam