Buying a condo can be a smart move, especially if you’re looking for low-maintenance living or are a first-time home buyer. But if you're new to the process, you might be wondering how to buy a condo and what makes it different from buying a house.
This article walks you through everything you need to know about buying a condo for the first time, how long it takes, and questions to ask before you move forward. It will also cover options that let you buy a condo with zero down payment.
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What’s different about buying a condo vs. a house?
Buying a condo might seem like buying any other home. However, purchasing a condo is different from buying a house in various ways:
HOA involvement
When you purchase a condo, you’re buying into the homeowners association (HOA), which manages the property or community. This means you’re on the hook for monthly HOA fees, averaging $300 to $400.[1] And these fees can go as high as $1,000 per month, depending on the property’s location and size.
Before you commit, make sure you review HOA fees and rules beforehand to know what you’ll be responsible for and the restrictions that can affect your future plans.
"I didn't want to have to worry about lawn or exterior maintenance," said Lindsay O., a condo owner. "I also took into account amenities. I didn't want gyms or pools or anything, because those can dramatically increase HOA fees, which you're stuck paying for even if you don't use the facilities."
Condo-specific financing challenges
Getting approved for condo financing is challenging compared to single-family homes. Lenders look at your finances and that of the condo association. If the property has too many renters, low reserves, or lawsuits, lenders will also see you as a risky borrower. Plus, not all condos qualify for government-backed financing.
Insurance differences
When you buy a house, you need homeowners insurance that covers the entire structure. But for a condo, the association’s insurance covers the property’s exterior and shared spaces.
You’ll still need your own condo insurance, often called an HO-6 policy, that covers everything inside your unit. Fortunately, condo insurance is cheaper than homeowners insurance.
Resale and appreciation considerations
Condos appreciate at a slower rate than single-family homes because of the shared ownership. Still, condos can see strong appreciation in urban areas and fast-growing markets. If you want to venture into real estate investing, check out this beginner’s guide to buying an apartment building.
Rules on renting it out if you decide to do that later on
If you’re buying a condo with plans to rent it out later, many condo associations have strict rental restrictions. Some don’t allow rentals entirely, while others limit the number of units in the building owners can rent out at a given time. Ask about this upfront before you commit.
What you actually own (unit interior vs. shared spaces)
With a condo, you own everything inside your four walls. The property’s exterior, including the roof, hallways, elevators, and amenities, are all shared spaces managed by the HOA. This shared ownership means you have less control but also means less responsibility for maintenance and repairs.
“I should've more thoroughly read exactly what exterior maintenance was included,” Lindsay said. “Window washing, for some reason, is NOT included. It wouldn't have impacted my decision, but I should've read more carefully.”
Pros and cons of owning a condo vs. a house
Buying a condo comes with several advantages but also has downsides.
Pros of buying a condo:
- It’s cheaper than buying a house
- Less maintenance and repairs
- Access to shared amenities like pools, gyms, and clubhouses
- Often located in areas where you can walk to grocery stores
Cons of buying a condo:
- No control over the property
- Monthly HOA fees
- Financing challenges
- Slower appreciation potential
- Restrictions on rentals, renovation, pets, among others
Similar considerations apply when buying a townhouse vs. a house, where you’ll encounter some shared ownership but usually with more control than a condo.
How to buy a condo for the first time
Wondering how to buy a condo for the first time? Here are the steps you need to follow for a successful purchase.
Get preapproved for a mortgage
Before you start shopping for your dream condo, figure out how much you can afford. Unless you've saved enough to buy a condo in cash, you’ll likely need to take out a mortgage. That’s why you need to get preapproved for a mortgage. This way, you’ll have an idea of a budget to work with.
Let your lender know that you’re planning to buy a condo. Some lenders may need additional information from the HOA, which can delay the process. Also, get preapproved by multiple lenders, as condo financing requirements and terms vary by lender.
Find an experienced buyer’s agent
Now that you have a clear idea of your budget, you need a real estate agent who has condo-buying experience. An experienced agent will help you navigate any challenges, spot red flags, and guide you through the entire process.
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Research neighborhoods and buildings
It’s time to shop around, and location is important. Compare neighborhoods while looking at things like crime rates, walkability, amenities, public transportation access, and property taxes.
You may also want to dig in to how well maintained the property is, the community vibe, and the renter-to-owner ratio. Past online reviews from residents can provide valuable insights about the building.
Review HOA rules and financials
You don’t want to buy a condo inside a building with financial problems. That’s why reviewing HOA’s reserve funds, recent financial statements, bylaws, meeting minutes, and CC&Rs (Covenants, Conditions & Restrictions) before touring units is crucial.
Pay attention to the HOA’s financial health, upcoming projects, and any history of special assessments.
Tour units
After reviewing HOA rules and financials, you can now tour units. When touring condos, pay attention to how well maintained the building is, noise levels between units, natural light, storage space, and condition of shared spaces like gyms and pools. Consider visiting at different times of the day to get a complete picture of the building’s vibe.
Make an offer
Once you settle on a condo, work with your agent and submit a competitive offer. Don’t hesitate to negotiate. Most sellers set their prices high, knowing that buyers will bargain.
To improve your chances for negotiation, research the average prices of condos in the area. Depending on the market, you may also be able to negotiate closing costs.
Schedule inspections and appraisals
You may think inspection isn’t necessary since you’re just buying a unit. It’s a very important step you shouldn’t skip. An inspector will check everything inside your unit, including the structure, plumbing, HVAC systems, and wiring.
You’ll also need an appraiser to determine the condo’s value and how it compares to recent sales of similar units in the area.
Close the deal and move in
If you’re satisfied with everything, you can sign the paperwork and move in whenever you’re ready.
Questions to ask before you commit
Before you sign the dotted line, it’s wise to ask these questions first:
Are there any upcoming special assessments?
These are one-time charges for major projects that HOA fees don't cover. Ask about any planned or discussed special assessments.
What are the HOA fees and what do they cover?
Make sure you know what you’ll be responsible for each month and what the HOA fees cover. What HOA fees cover varies by condo association but generally includes:
- Landscaping
- Snow removal
- Trash
- Building maintenance
- Utilities in shared spaces
- Repairs in common areas
- Amenities on the property
Are rentals allowed?
Even if you don’t plan to rent out your condo, it’s a good idea to understand the rental restrictions.
Is the building FHA/VA approved?
If you’re planning to use government-backed financing, confirm if the building is FHA- or VA-approved.
What are the association rules?
You don’t want to settle in your new condo only to realize that they don’t allow pets. Ask for a copy of the CC&Rs, bylaws, and rules and regulations set by the condo association.
What is the ratio of owners to renters?
A building with more renters than owners is a red flag. Make sure the property has at least 50% owner occupancy, especially if you’ll be financing your purchase with an FHA loan.
Is there any pending lawsuit?
An association with pending or active lawsuits could mean more problems down the road. Don’t overlook this, even if it’s a minor litigation.
How to buy a condo with no money down
Wondering how to buy a condo with no money down? Is it even possible? In some cases, yes. Here are situations that let you buy a condo with zero down payment.
- You’re eligible for a VA loan (for veterans, active-duty military members, or surviving spouses).
- You qualify for a USDA loan (for low- and moderate-income families in eligible rural areas).
- You qualify for a first-time buyer down payment assistance program in your state.
While buying a condo with no money down is possible, only a few people qualify. For most people, you’ll need to put 3-5% down, depending on the type of conventional loan you qualify for. And if you want to avoid paying private mortgage insurance (PMI), expect to put at least 20% down.
How long does it take to buy a condo?
For buying a condo, it typically takes 30 to 60 days from mortgage preapproval to closing the deal. But keep in mind that it could take longer due to extra lender requirements, HOA documentation, and financing delays.
Additionally, if you’re using government-backed financing and the condo isn’t approved by at least one of these agencies (VA, FHA, Fannie Mae, or Freddie Mac), it could slow down the process.
Final take: Is buying a condo right for you?
Buying a condo isn’t right for everyone, but it could be the perfect choice for you if you want to become a homeowner without stretching your budget, want to live in a walkable area, prefer low-maintenance living, and don’t mind shared ownership and rules. Also, if you’re a senior first-time home buyer or looking to downsize, a condo could be a great option.
If you’re ready to buy your dream condo and still unsure where to get started, talk to a Clever Real Estate agent who will guide you through the entire process.