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Can you even get a home loan for around 30 to 40?

V

VinylxScratches

Golden Member
There are condos for 30 to 40. I have about 20 saved but would like to get a loan. Is there a chance I can get a loan with 5 down? My credit score is about 769.
 
Generally, condos are terrible investments in an area where housing is cheap to begin with. Might want to avoid that.
 
Condo costs $40k, you want to put down $5k and get a loan for $35k...is that correct?

That's a 12.5% down-payment. I have no idea if it being a small mortgage matters, but based on the percentages, you shouldn't have a problem.

That being said, you would be better off putting down $8k (20%) so that you don't need to pay PMI.

Where are you buying a condo for $40k?
 
Jaepheth said:
Perhaps it's not an investment. Maybe he actually wants to live there.
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Then he should rent it. Whether you live in it or not, every home purchase should be evaluated as an investment. It's an asset that you might want to sell down the road, pull out equity, whatever. But if the home you live in isn't an investment, then there wouldn't be that rent-mortgage gap.
 
sjwaste said:
Then he should rent it. Whether you live in it or not, every home purchase should be evaluated as an investment. It's an asset that you might want to sell down the road, pull out equity, whatever. But if the home you live in isn't an investment, then there wouldn't be that rent-mortgage gap.
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But, there's a huge difference in what you can do when you own vs. rent. You want to paint the rooms? You want to put in hardwood floors? You want nice push carpet? Etc. - you can do all that without needing permission, and without improving someone else's property. Then again, there are a shitload of restrictions about what you can and can't do in many condos.
 
seepy83 said:
Condo costs $40k, you want to put down $5k and get a loan for $35k...is that correct?

That's a 12.5% down-payment. I have no idea if it being a small mortgage matters, but based on the percentages, you shouldn't have a problem.

That being said, you would be better off putting down $8k (20%) so that you don't need to pay PMI.

Where are you buying a condo for $40k?
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Lake County Area in Illinois.
 
DrPizza said:
But, there's a huge difference in what you can do when you own vs. rent. You want to paint the rooms? You want to put in hardwood floors? You want nice push carpet? Etc. - you can do all that without needing permission, and without improving someone else's property. Then again, there are a shitload of restrictions about what you can and can't do in many condos.
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None of that matters if you're putting 40k into something that might be worth 30k in 10 years. Without having knowledge of the specific location, a generalization that might serve as a good starting point is this: Condos need location - near the metro in a strong neighborhood, a particularly great part of the city, near a place where a lot of people work or want to visit. Condos built in an area where land is cheap/plentiful or SFH's are relatively cheap are basically just Section 8 waiting to happen. If the middle class in a particular area can, on average, afford an average home, who is buying the condos?

I'll use an example from the area where I just left, since I know we have some posters from there. What's going on with all of those townhouses and condos they built in the very outer DC suburbs - places like Woodbridge? The ones on the river are doing great, and the ones on Rt 1 by the Safeway, not so much.

Cheap housing for the sake of its cheapness can be a bad move. I'm not saying not to do it, but I am suggesting looking at it a lot harder. Condos tend to do better where it's necessary to build up, not out.
 
VinylxScratches said:
I see your point sjwaste. Would you hold the same idea towards townhomes for around the same price?
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Generally, yes. Townhouses are based on the same principles - cramming more housing into less space. If the space is truly scarce in that location, SFH's are expensive and townhouses are more affordable. But if the townhouses exist only to create dense residential housing in an area where the average middle class person can afford an average SFH, you're buying into an area that is (politely put) on the low end.

I'm not saying you have to buy as much house as you can afford, but cheap doesn't always equate to good value. If you're going to live in it, you might not want something in a mostly Section 8 area. If you plan to rent it, maybe you do want the rent security and are willing to trade off for higher maintenance costs.

Keep in mind I am ignoring freestanding condos and really generalizing about multi-unit buildings. Freestanding condos are something many folks like because they have a "house" but don't have to maintain any grounds. Different market.

For all I know, these places could be great value for the area. I'm just suggesting more research. Start with what the places in the area were selling for 5 years ago versus now, look at what they rent for, compare against SFH pricing in the area, etc.

I'm a big fan of buying the worst thing you consider liveable in the best neighborhood you can afford. If that 40k condo just needs some work and is sitting in an area with great schools, 500k SFH's, solid infrastructure and a strong tax base, for all I know it's a great buy. But you know the area and I don't.
 
There is more to attached dwellings than just a builder optimizing profit.

For some they like the idea of living around others and many condos have functions at their clubhouse people can meet and greet at. You have less maintenance and no yard to care for most times.

Now those three story townhouses that were built very narrow were indeed a method in the boom to 'sell more square feet'...some though like that model.

I seriously don't understand where most of you get your ideas from.
 
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