If you are considering buying a condo, it is imperative that you know what you are getting into and how the past year has turned things around. The rules and regulations for condo mortgages have changed a lot in 2009 …

In April, the two government-run mortgage companies, Fannie Mae and Freddie Mac, tightened their guidelines for those looking to own a condo or multi-family home. The restrictions make it difficult for potential buyers to finance themselves through Fannie Mae and Freddie Mac, making the mortgage more expensive.

The April policy requires the association and condo operations to be assessed, as well as its credit ratings. The new requirements touch on topics such as:

Association insurance
financial statements
Status of fees receivable from those who live in the condominium
Who owns which units
How many units are empty

If the condo you are looking at does not have a good report, you may need to go to a private mortgage insurer. Unfortunately, private insurers are getting even more demanding; some have stopped covering all mortgages on the condominiums. In order to get a loan, even with good credit, you may end up paying up to 40% down on mortgage payments you can afford.

However, even if the condo is approved, you will still need to get 25% or attempt government financing. Fannie Mae and Freddie Mac say it doesn’t matter what your credit score is. If you can’t pay 25% or more in the down payment, you’ll end up with an additional three-quarter penalty: $ 750 for every $ 100,000 borrowed. What is it worth? Don’t buy a “traditional” single-family home.

What is the moral of the story? If you want to buy a condo, spend more time researching than you normally would. Look for those that have at least a 50% occupancy rate. Find out if the occupants pay their installments and if one person owns more than 10% (a big “no deal” for the two mortgage companies). There are good condos available, but the rules make buying a difficult game.