If you are planning on buying a condo in 2010, you need to realize that you are not the only borrower. 

With banks seeing a larger percentage of their late payments and foreclosures occurring in their portfolio of  condo loans; guidelines for buying a condo have gotten more rigid. 

Not only do you the buyer have to qualify for the loan, the condo project also has to qualify.   

Banks want to ensure that the condo project and the home-owners association are financially stable and do not create additional layers of risk for the borrower.  

This adds an extra level of underwriting and approval requirements to the process of buying a condo versus a single family residence.   

Many agents who list condos will know if their condo project already have FHA approval, is in good standing for traditional lending, or may have some financial challenges.   

The most common items that can make a condo project ineligible for bank approval or FHA lending are the following:

•  Units are more than 50% rentals
•  More than 25% of units are for sale or vacant
•  There is pending litigation involving the condo project
•  The project is classified “live/work” or has attached commercial space
•  The project is new construction and didn’t apply for FHA / Fannie / Freddie approval during the construction phase
•  Co-ops and many conversions do not qualify for financing
•  The project does not have ’sufficient’ reserves to meet it’s monthly expenses