5% Down Payments Available Again

February 9, 2010


Five Percent Down Payments Are Possible Again, Within Limits

Five Percent Down Payments Are Possible Again, Within Limits

The word is out in the real estate world…I’m hearing the question all the time from agents. Katie Anderson recently asked me, “I’ve heard that only a 5% down payment on condos is coming back. Neena is this true?” Yes these low down payment loans ares coming back into the market?guidelines are loosening up!

The New Rules for 5% Down Payments

The general guidelines to be aware of for 95% conventional condominium financing are:

  • The entire condominium project must be “100% complete,” which means that the building and its elements must be completed.
  • At least 90% of the units in the project or phase must be sold and conveyed to unit owners.
  • All facilities related to the subject property must be owned by the homeowner?s association.
  • No single entity may own more than 10% of the total units.
  • No more than 20% of the total building square footage can be used for non-residential purposes, which means no more than 20% of a building can be commercial space.
  • No more than 30% of the units in the subject property may be owned by investors.
  • The person taking out the loan must have 5% of their own funds to put towards the real estate purchase, the borrower cannot get a gift for the down payment

There are Limits to the 5% Down Payment Option

You need to be aware of some types of projects that do not meet guidelines:

  • Condo-hotels and timeshares
  • Kiddie condos (when a parent buys a place for their child for college and the student has no income but is on the loan)
  • Condo Associations that are in a law suit

So, there are limits, but it is possible for people to now go out looking for a particular type of condo that they can buy with a lower down payment. Listing agents should be paying close attention to these rules and checking to see if their listings meet the requirements. If they do…market accordingly!

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About Neena Vlamis

Neena Vlamis, President and Co-founder of A & N Mortgage Services, enjoys a challenge. In particular, she and colleagues specialize in finding the best mortgage product for each of their home-buying customers. Whereas many financial institutions shy away from customers who have special financial needs, Neena and A & N boast a winning record with clients from all ends of the spectrum. Neena and the professionals at A and N succeed in home-financing scenarios as a result of their unparalleled commitment to providing honest advice, extensive breadth of personal finance knowledge vis-a-vis home ownership, and their power of being a mortgage bank and broker. These assets, in combination, have built A & N Mortgage Services into the premier originator of residential home loans in the Chicagoland area. Neena Vlamis and A and N Mortgage will identify the optimal financial product and strategy for your specific homeownership need. You can contact her at neenav@aandnmortgage.com or 773-305-LOAN.

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One Response to “5% Down Payments Available Again”

  1. Katie Says:

    Great News, Neena!