How to Buy a Condo With No Money Down

by Helen Jain ; Updated September 11, 2015
Purchase a condo with no money down if you can afford the high-interest payments.

Buying a home can be a challenge, especially when there isn’t enough money in the bank for a traditional 20 percent down payment. The best solution is to purchase a home with little or no money down and obtain a loan for the entire cost of the home. When the purchase is a condo, the "no money down" options are limited because multi-family units often do not fall under the same real estate financing programs that typical homes do. There are ways to buy a condo with little or no money down, though it takes some searching.

Determine the loan amount that is affordable for you. No money down mortgages typically may have a higher interest rate than a traditional down payment mortgage, so make sure this will not make the amount unattainable. According to the U.S. Department of Housing and Urban Development (HUD) website, a mortgage payment should not be more than 29 percent of gross income. Anything more than that will be too high to pay due to other living expenses.

Find a condo unit where at least 90 percent of the condos in the building have been sold, which is a requirement for an FHA, or Federal Housing Administration loan, according to the Miami Condo Shop. FHA loans are a good option for no money down purchases.

Find a condo development where most of the owners live in the condo, advises the Miami Condo Shop website. Like the 90 percent purchased rule above, condos should be occupied by at least 51 percent or more of the owners, and not being used as rentals in order to qualify for an FHA loan. Since condos are rented out at times, no money down loan programs may require that the buyers must live in the unit.

Read the general maintenance costs for the condo and make sure that there are no deferred maintenance issues. General maintenance in condos should be at acceptable and reasonable levels for eligibility in government no money down options.

Improve personal credit. While there are loan options for those with bad credit, most no money down loans will not accept individuals with poor credit scores. Check on your current credit rating and do everything possible to improve it. Since ratings are updated only once a month, allow at least a few months for credit improvement.

Talk to a real estate agent about no money down concessions and options. Part of no money down options is to obtain concessions from the seller regarding closing costs and similar fees, explains the Miami Condo Shop. There are also no money down options through local banks, depending on the state and the area, to which real estate agents may direct you.

About the Author

Helen Jain has been writing online articles since December 2009 for various websites. She has studied English and psychology and hopes to get a Ph.D. in English in the future.

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