Condo Financing in Brickell in 7 Steps

condo financing in Brickell Miami
July 5, 2020

The first information that we need to know about Condo Financing is the three different types of residential mortgages.

  • Primary residence: Usually it is the easiest to finance and requires the lowest down payment. your primary residence is the one in which you reside on a permanent basis, generally close enough to your place of work. This property can not be rent out. You can not own two primary residences.
  • Second Home: A residential property you own to use some of the time. Also referred to as “Vacation Home” can be rented out with restrictions. Lenders have different rules and owner occupancy requirements. It is not uncommon to have two second homes as long as they are in different areas, for example, a beach condo and a countryside home.
  • Investment Property: A residential property intended purely as a rental property. Typically requires larger down payments. You can own as many as you want as long as you have the financial capability for the down payments and the lenders don’t see it as a financial risk.

Steps for Condo Financing:

  1. The first step lenders take is to qualify YOU as an individual.
  2. To qualify you for a loan, the lenders will require some personal information that includes:
    • copy of your income taxes,
    • proof of income (ex: pay stubs),
    • bank statements,
    • loan application,
    • other documents they might need. Once you provide the required documentation they issue an approval or denial letter.
  3. Assuming that you are approved, the approval letter will detailed the amount that you have approved to, the interest rates, down payment required, and other loan terms. Now you are ready to contact your real estate agent.
  4. Once the lender receives the executed contract, they evaluate THE PROPERTY.
  5. Lenders request a Condo Questionnaire from the condo association with questions about pending legal issues, amount of reserves and other questions
  6. Lenders request an appraisal
  7. Once the property is approved and provided you have been approved by the condo association, you are ready for closing.

Condo Financing versus Houses

As mentioned before, lenders also evaluate the property you desire to buy. Typically, the property needs to be habitable. It must have a full kitchen with all appliances, full bathrooms, and in the case of a house, a roof with a remaining life of at least 5 more years. They also require an appraisal by a licensed real estate appraiser to determine how much the property is worth.

In case you are purchasing a condo in Brickell or any other area in Miami, the lender also perform some scrutiny about the condo association. They request a Condo Questionnaire in which they inquire about the building financials, reserves, insurance, legal issues against the association, percentage of homeowner occupied units vs rented units, and other questions.

The qualification of the building is as important as your personal qualifications. You might have the perfect credit, no debts and all income requirements, and your loan could still be denied because the building don’t qualify. That was common during the real estate crash of 2008. Large percentage of homeowners did not pay their dues and many associations in Brickell, Miami were bankrupt making that building unsuitable for financing from the lenders perspective.

Before 2019, to be able to buy a condo unit with FHA, the building had to be “FHA approved”. The approval process was expensive and long and therefore, most buildings didn’t bother to get approved. In 2019 FHA published a new rule where single-units (condo units) can be financed with an FHA loan even if the building is not FHA approved.

Here are a list of Brickell buildings that can be financed with low down payment or even with an FHA loan.

Brickell Buildings to buy with only 5% Down Payment:

Brickell Buildings to buy with 10% Down Payment:

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