Maintenance fees eat borrowing power
Lenders add a portion of your condo fee, typically half, to your housing costs when they calculate qualifying ratios. A fee of eight hundred dollars a month can reduce the mortgage you qualify for by tens of thousands. A freehold house has no fee, but it does carry the roof, furnace and everything else you now pay for yourself.
The status certificate matters to the lender too
Your lawyer reads the status certificate to protect you. The lender cares about the same things: reserve fund health, pending special assessments, litigation, and the percentage of units rented. A thin reserve fund or active litigation can make a lender decline a building outright, no matter how strong your application is.
- Reserve fund balance and the most recent study
- Any special assessment approved or under discussion
- Owner-occupancy ratio in the building
Small units and lender minimums
Many lenders set a minimum unit size, often around five hundred square feet, and some go further on studios and student-area buildings. A perfectly liveable micro-unit can be financeable at one lender and refused at three others. This is the clearest case where shopping the file across lenders changes the outcome.
Freehold, semi, and the cost of the roof
A house gives you land, flexibility and often a basement that can carry rental income. It also gives you the entire maintenance bill. Lenders will sometimes count a portion of legal secondary-suite income toward qualifying, which can make a house cheaper to qualify for than the sticker price suggests.
Frequently asked questions
- Do lenders count all of my condo fee?
- Most count fifty percent of it in your housing ratio, though some count more. It reduces the mortgage amount you qualify for either way.
- Can a lender refuse a specific condo building?
- Yes. Reserve fund problems, litigation, a high rental ratio or a very small unit size can all cause a decline even with a strong borrower.
- Does basement rental income help me qualify for a house?
- Often yes, if the suite is legal and documented. Lenders differ on how much of the rent they will count, which is why the lender choice matters.