Compare current condo mortgage rates

Current condo mortgage rates

Rates for condo loans and other types of mortgages remain higher now compared to recent years, but it's uncertain they'll stay that way, especially if the economy enters a recession or otherwise contracts. Generally, condo mortgages tend to have slightly higher interest rates due to increased risk, and particularly if the mortgage is for a second home or investment property.

How do condo mortgages differ from conventional mortgages?

There isn't a one-to-one difference between a condo mortgage and a conventional loan; a condo mortgage can be a conventional or government-backed loan. However, there are some differences in the process of getting a mortgage for a single-family home versus a condo. These include:

1. Condo mortgages call for additional documentation because lenders screen both the borrower (you) and the condo project. The lender looks at how many units the community has, for instance, and the proportion of owner-occupied to tenant-occupied units, as well as its financial footing and insurance coverage.
2. Those extra steps can also cost you more at closing, both in terms of time — it can take longer for the lender to do a thorough assessment — and money, since there could be fees to obtain the documents.
3. Getting financing for a condo might require a higher down payment depending on the type of loan you get. This might be easier to come by, however, since condos are generally less expensive than single-family homes.

How to get a condo mortgage

Getting a condo mortgage can be more difficult than a loan for a single-family home because your lender considers more than just your personal finances and the property — it’ll also scrutinize the whole development. Here are some of the basic requirements you’ll need to meet:

• Credit score requirements: A conventional condo mortgage typically requires a minimum credit score of 620. For an FHA loan, you’ll need a score of at least 580 with 3.5 percent down.
• Debt-to-income (DTI) ratio: For a conventional condo mortgage, you’ll generally need a DTI ratio of no more than 45 percent; for an FHA loan, 50 percent; and for a VA or USDA loan, 41 percent.
• Down payment: Conventional mortgages require a minimum of 3 percent down; FHA mortgages require at least 3.5 percent; and USDA and VA loans have no set down payment requirement.

When you’re ready to get a condo loan, start by:

1. Reviewing your credit and finances. Your credit score is the primary driver of your mortgage rate, so if it needs work, now’s the time to address it. Likewise, while you don’t necessarily need 20 percent down, the more you can save, the more flexibility you’ll have.
2. Compare mortgage lenders and offers. There are many ways to finance a condo. Doing the legwork can help you uncover the best — and lowest-cost — option.
3. Get preapproved. Once you have a lender in mind, get preapproved. That way, you can make an offer right away when you find the right property.

What are the different types of condo mortgages?

If you’re planning to buy a condo to live in, you might qualify for one or more of the following mortgage options:

• Conventional loans – 3 percent or 5 percent down, with a 620 minimum credit score
• FHA loans – 3.5 percent down with a 580 minimum credit score, or 10 percent down with a 500 minimum credit score; must be for an FHA-approved condo
• VA loans – No minimum down payment or credit score; must be an eligible service member or veteran; must be for a VA-approved condo
• USDA loans – No minimum down payment or credit score; must be in an eligible location

If none of these options work for you, look into a non-warrantable condo loan. Non-warrantable condos don’t meet the federal operational and/or financial standards required for many types of condo mortgages.

Additional resources for condo mortgages

• 7 tips for buying a condo 
• Are condos a good investment?
• What is an FHA-approved condo?

Meet our Bankrate experts

Written by: Jeff Ostrowski, Writer & Housing Market Analyst

I cover mortgages and the housing market. Before joining Bankrate in 2020, I spent more than 20 years writing about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. I’ve had a front-row seat for two housing booms and a housing bust. I’ve twice won gold awards from the National Association of Real Estate Editors, and since 2017 I’ve served on the nonprofit’s board of directors.

Read more from Jeff Ostrowski

Edited by: Suzanne De Vita, Managing Editor, Home Lending

I’ve covered the housing market, mortgages and real estate for the past 13 years. At Bankrate, my areas of focus include first-time homebuyers and mortgage rate trends, and I’m especially interested in the housing needs of baby boomers. In the past, I’ve reported on market indicators like home sales and supply, as well as the real estate brokerage business. My work has been recognized by the National Association of Real Estate Editors.

Read more from Suzanne De Vita