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Buying a condo or townhome in California.

Condos and townhomes are popular in California because they often cost less than single-family homes, especially in cities. But financing them has an extra step: the building itself must qualify, not just you. This page explains how condo and townhome loans work, in plain language.

The key new idea is warrantability — whether the condo project meets lender standards. Let’s break it down.

A modern California condo building
Quick answer

When buying a condo, lenders review both you and the condo project (the HOA). The project must be “warrantable” — meeting standards on owner-occupancy, finances, and insurance — to get standard loans. Townhomes are often financed more like single-family homes if you own the land. Condos usually have HOA dues, and FHA loans require the project to be on an approved list.

What this means

With a single-family home, the lender only checks you. With a condo, the lender also checks the HOA and the building, because problems there could affect your home’s value.

Warrantable condo: Meets lender standards → standard loans available.
Non-warrantable condo: Fails some standard → fewer, often pricier loan options.

Townhomes can be condos or fee-simple (you own the land). If you own the land, financing often looks like a single-family home. If it is legally a condo, the condo rules apply.

What lenders check about the HOA

ItemWhy it matters
Owner-occupancy ratioToo many rentals can be a red flag
HOA finances and reservesThe HOA should be financially healthy
Master insuranceThe building must be properly insured
Pending litigationLawsuits can make a project non-warrantable
One owner controlling many unitsCan be a concentration risk

This review often uses a condo questionnaire sent to the HOA.

Step by step

How it works

1
Get pre-approved. Standard personal review.
2
Identify the property type. Condo or fee-simple townhome.
3
Project review. The lender checks the HOA via a condo questionnaire.
4
Confirm warrantability. Or, if FHA, that the project is on the approved list.
5
Appraisal and underwriting. Including the project review.
6
Close. You sign, fund, and get the keys.

Requirements (at a glance)

RequirementTypical condo/townhome rule
Credit score~580+ (FHA), ~620+ (conventional)
Down paymentAs low as 3%–5% (varies)
Project statusWarrantable, or FHA-approved for FHA loans
HOA duesCounted in your monthly cost
InsuranceMaster policy plus your own coverage

Benefits

Lower price. Often cheaper than single-family homes.
Less upkeep. The HOA maintains shared areas.
Amenities. Pools, gyms, and security in many buildings.
Good entry point. Popular with first-time buyers in cities.
Townhome flexibility. Fee-simple townhomes finance like houses.

Potential drawbacks (the honest part)

HOA dues. A monthly cost that counts toward qualifying.
Project must qualify. A non-warrantable condo limits your loans.
Special assessments. The HOA can charge extra for big repairs.
Less control. HOA rules govern many decisions.
FHA approval needed. For FHA, the project must be on the approved list.
Real-world California examples

What it looks like in practice

Warrantable condo in Los Angeles
Warrantable condo in Los Angeles

Maria buys a condo in a healthy, mostly owner-occupied building. It is warrantable, so she uses a standard conventional loan with 5% down.

FHA-approved project in Sacramento
FHA-approved project in Sacramento

Marcus wants an FHA loan, so he confirms the condo project is on the FHA-approved list before making an offer.

Fee-simple townhome in San Diego
Fee-simple townhome in San Diego

The Lee family buys a townhome where they own the land. It finances much like a single-family home. See Single-Family Home.

Examples are for learning only. Your options depend on the project and your finances.

Common mistakes

1Ignoring warrantability. A non-warrantable condo limits financing.
2Forgetting HOA dues in your budget. They count toward qualifying.
3Skipping the FHA approval check. FHA needs an approved project.
4Overlooking special assessments. Big repairs can mean extra charges.
5Not reading HOA documents. Review finances and rules carefully.
6Assuming all townhomes are condos. Fee-simple townhomes differ.
Good questions

Frequently asked questions

A condo project that meets lender standards on occupancy, finances, and insurance, making standard loans available.

Next steps

A condo or townhome can be a smart, affordable entry into California homeownership.

Just confirm the project qualifies and budget for HOA dues. EZ Online Mortgage can help confirm a condo project’s status and find the right loan for it.

Get Pre-Approved (818) 305-6704
Keep learning

This page is for education only. It is not a loan offer or a promise of approval, rates, or terms. Project rules vary, and qualification depends on your individual circumstances. Equal Housing Opportunity · NMLS #362311 · CA DRE #01871814.

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