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Read our collection of guides and articles about homebuying to help you on your mortgage journey.

![A comprehensive guide to a second home loan](https://cdn.builder.io/api/v1/image/assets%2Fea37b90b89334a2ab1714e2159c75418%2F5fd9119897cd43f988df2db8824d200b)

 <br>
  <div class="learn">
<p class="learnfont"><strong>What You’ll Learn</strong></p>

<p class="learnfont">Second homes, or vacation homes, must meet specific guidelines to be eligible for a second home loan.</p>

<p class="learnfont">Second home mortgage qualifications are typically more strict than for a primary residence.</p>

  <p class="learnfont">Beyond a mortgage, several alternative financing options can help you pay for your second home.</p>

  </div>
  <br><br>
<h2 style="margin-bottom:24px;">Table of contents</h2>
<ul>
    <li><a href="#1">What is a second home mortgage loan?</a></li>
    <li><a href="#2">Things to Consider When Taking Out a Mortgage Loan for a Second Home</a></li>
    <li><a href="#3">Second home loan mortgage requirements</a></li>
    <li><a href="#4">Alternative ways to finance a second home</a></li>
    <ol style="margin-left:24px">
        <li><a href="#5">Home equity line of credit (HELOC)</a></li>
        <li><a href="#6">Cash-out refinance</a></li>
    </ol>
    <li><a href="#7">How to Buy a Second Home With a Mortgage: The process</a></li>
    <ol style="margin-left:24px">
        <li><a href="#8">Get pre-approved for a second home mortgage loan</a></li>
        <li><a href="#9">Work with a local agent</a></li>
        <li><a href="#10">Hunt for your new home</a></li>
        <li><a href="#11">Make an offer</a></li>
        <li><a href="#12">Close on your mortgage</a></li>
    </ol>
    <li><a href="#13">Get a second home loan with Better Mortgage</a></li>
</ul>
<br>

If there’s a special place in your heart you frequently visit, then you may be ready to ditch hotel rooms and rentals and buy a more permanent place of your own. Second homes can serve a variety of purposes, from vacation spots to practical dwellings in prime locations.

Here’s how second homes differ from other property types, how second mortgages work, and what you can expect from the buying process once you’re ready to get started.

<div id="1"><br></div>

## What is a second home mortgage loan?
A second home loan is a mortgage used to finance a secondary or vacation residence. 

Second home loans differ from those used for [primary residences and investment properties](https://better.com/content/primary-residence-second-home-or-investment-property-whats-the-difference/) because each property type represents a different level of risk for lenders. For instance, because you’re not dependent on your second home as a primary place to live, lenders assume you may be more likely to stop making mortgage payments if you fall on hard times. 

For a property to be [considered a second home](https://better.com/content/buying-a-second-home/) and deemed eligible for a second home loan, it must meet the following guidelines:

- The home must be a single-unit dwelling.
- The property must be suitable for year-round occupancy, even if you only intend to use it for part of the year.
- You’re required to have exclusive use of the property, meaning no long-term leases or timeshare scenarios.
- The home may not be under the control of a property management company.
- In most cases, it must be located a certain distance from your primary residence.

You may be able to rent out a second home when you’re not using the property, but rentals are typically restricted to 180 days per year. And any projected rental income cannot be considered for mortgage qualifying purposes.

[Unlike second property mortgages, investment property mortgages’](https://better.com/content/second-home-vs-investment-property) allow for even longer rental terms (year-round), but also come with the toughest qualifying guidelines because they tend to have higher delinquency rates than other occupancy types. Lenders will typically expect that you are truly using the property as a second home and not a full investment property that allows for tenancies longer than 180 days.

<br> <br>

 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/start">Get started with Better Mortgage</a>  
 </div>

<div id="2"><br></div> 

## Things to consider when financing a second home
While [purchasing a second home](https://better.com/content/buying-a-second-home/) is an exciting adventure, financing requirements can be a bit more strict than those for a primary mortgage. Second mortgages also tend to come with higher interest rates because of the increased risk they represent to lenders.

<div id="3"><br></div>

## Second home loan mortgage requirements

Here’s what your typical mortgage requirements [qualify for a second home loan](https://better.com/content/buying-a-second-home/) are:

- At least 20% of the purchase price as a down payment
- A lower debt-to-income ratio, usually less than 43%
- A good-to-excellent credit score
- Proof of enough cash reserves to cover several months’ worth of mortgage payments

<div id="4"><br></div>

## Alternative ways to finance a second home
If you think it will be a challenge to get a second mortgage based on the requirements above, or you’d prefer a different way to pay, there are other alternatives to consider. These options will allow you to leverage the equity you’ve built up in your primary residence, and use it toward your second home.

<div id="5"><br></div>

### Home equity line of credit (HELOC)
A [home equity line of credit](https://better.com/content/when-and-why-would-i-need-second-mortgage) allows you to borrow against the equity from your primary home on an as-needed basis and pay it off with interest over time. It works similarly to a credit card where you can borrow up to a specified credit limit, and the amount gets replenished as you make payments. 

Keep in mind that because HELOCs are secured by your primary residence, your lender may be able to foreclose on your home if you stop making payments.

<div id="6"><br></div>

### Cash-out refinance
A [cash-out refinance](https://better.com/content/guide-to-cash-out-refinance) is similar to a traditional refinance in that you replace your current primary mortgage with a brand new one. However, with a cash-out refi, you tap into your current home’s equity to free up extra cash for your new second home. 

Of course, this will add to your existing mortgage balance by increasing the amount you owe, which may result in a higher mortgage payment. Also, when you refinance, you typically reset the payoff clock on your mortgage, especially if you’re getting a new 30-year home loan, so going this route for a second home may take you longer to pay off your first mortgage. 

<div id="7"><br></div>

## How to buy a second home with a mortgage: The process
If you decide to move forward with a second home loan, then here are the steps you can expect from the homebuying and mortgage process. 

<div id="8"><br></div>

### Get pre-approved for a second home mortgage loan
Before you start shopping around and going to open houses, you’ll want to confirm [how much you can afford](https://better.com/how-much-home-can-i-afford) with Better Mortgage to spend. A [pre-approval](https://better.com/content/how-to-get-pre-approved-for-a-mortgage) can give you an idea of the amount you’ll be approved to borrow. 

Not all lenders offer second home financing. But luckily, Better Mortgage does! With our online process, you can get pre-approved in as little as 3 minutes, without affecting your credit score. 

<br> <br>

 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/start">Get started with Better Mortgage</a>  
 </div>

<div id="9"><br></div>

### Work with a local agent
Once you’ve been pre-approved, you’re ready to connect with a [Better Real Estate Agent](https://better.com/with/find-an-agent). Because you’ll likely be buying a second home in a different area from where you currently live, it’s a good idea to interview a few local agents. They should be able to answer your questions about various neighborhoods, traffic patterns, and local events and help guide you through your search.

<div id="10"><br></div>

### Hunt for your new home
After connecting with a [Better Real Estate Agent](https://better.com/with/find-an-agent), it’s time for the fun part: shopping for homes. Think about taking a trip to the area where you want to buy and asking your agent to set up multiple showings to make the best use of your time.

<div id="11"><br></div>

### Make an offer
Once you’ve found the perfect second home, it’s time to [make an offer](https://better.com/content/how-to-make-an-offer-on-a-home). You’ll work with your agent to decide how much to offer, draw up the paperwork, and negotiate with the seller. If your offer is accepted, you’ll be ready to move on to the last step in the process.

<div id="12"><br></div>

### Close on your mortgage
[Most homes close within 1-2 months](https://www.forbes.com/advisor/mortgages/how-long-does-it-take-to-close-on-a-house/ "external") of when the seller first accepted the offer. During this time, you’ll have any requested inspections, receive an appraisal report, complete your mortgage documentation, and attend a final walk-through.

Then, you’ll be ready to head to closing where you and the seller will sign paperwork and your lender will send over the necessary funds. At the end, you’ll be handed the keys and officially be the proud owner of a second home and you can close 10 days faster than the industry average with Better Mortgage.

<div id="13"><br></div>

## Get a second home loan with Better Mortgage
Buying a second home is an exciting opportunity. But before you dive in, it helps to know exactly how much second home you can afford. 

Our pre-approval process takes as little as 3 minutes and can give you the confidence to make an offer on your second home.

<br> <br>

 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/start">Get started with Better Mortgage</a>  
 </div>

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Thinking of buying a vacation home? Find out the requirements the property must meet to be eligible for a second mortgage. 

A Comprehensive Guide to a Second Home Loan

Blog post image for A comprehensive guide to a second home loan

A comprehensive guide to a second home loan

![Two people reviewing information on a laptop and a piece of paper, learning how to get a mortgage approval.](https://cdn.builder.io/api/v1/image/assets%2Fea37b90b89334a2ab1714e2159c75418%2Fe9fddf8b52174cb38f926c9d54534a0a) 

  </div>
  <br><br>

Anyone who’s not one of the lucky few to buy a home with cash will need to get approved by a lender for a mortgage. The first thing to know about a mortgage approval is there’s no single moment of ‘approval’ throughout the process. Instead, there are multiple approvals that increase in verification and certainty as you get closer to buying a home. 

The ease and [speed of approvals](https://better.com/content/home-buying-process-timeline) can vary greatly from lender to lender, so keep this in mind as you shop around. As a general rule of thumb, the stronger and faster the approval, the better. Stronger approvals can increase your chances of winning an offer and help give you peace of mind that you’ll get the loan.

In this post, we’ll break down the different types of buyer approvals and when and how to get them. 

## What is a mortgage approval? <br> 

A mortgage approval is the process by which a lender evaluates a borrower's financial and creditworthiness to determine if they are eligible for a mortgage loan for specific terms and conditions of that loan, like rate and loan term length. 

Mortgage approval is a crucial part of the homebuying process, as it signifies that the lender is willing to provide the borrower with the funds needed to purchase a home, subject to certain conditions and requirements.

The three main types of mortgage approvals we’ll review here are pre-approval, verified approval, and conditional approval. 

## What is a mortgage pre-approval? <br>

A mortgage pre-approval is an estimate of what a lender is willing to lend you. It’s based on your income, assets, debts, and credit profile, as well as the loan term, (e.g. 30-year fixed, 15-year fixed), down payment, property type, and estimated interest rate, property taxes, homeowners insurance.

Once you’re pre-approved, lenders will [issue you a letter](https://better.com/faq/pre-approval-letters/how-do-i-get-a-pre-approval-letter) stating the loan amount you are pre-approved for. One thing to keep in mind is that your letter will often show the loan amount that you think you’ll need to borrow instead of your maximum pre-approval amount. This is because you typically include the letter when you submit offers, and it can weaken your negotiating power to show sellers the maximum you can afford. 


### When should I get a mortgage pre-approval? <br> 

It’s recommended that you get pre-approved before you start shopping for homes to get a sense for your home buying budget, view homes within that budget, and show sellers that you’re a serious buyer who can afford the home. 
 

### How to get a mortgage pre-approval? <br> 

To issue you a pre-approval, lenders will collect information on your income, assets, and debts. Because pre-approvals are not standardized across lenders, the information and documentation you need to provide will also vary by lender. 

At Better Mortgage, your [pre-approval](https://better.com/content/where-and-how-to-get-a-mortgage-pre-approval-online) is based on stated income and assets and a soft credit pull. This will never impact your credit score, so anyone who is curious about their affordability can get a pre-approved estimate at any time. 

### Is my mortgage pre-approval final? <br> 

The more accurate you are with your inputs on income and assets, the more accurate your pre-approval will be, but a pre-approval is not final and is only intended to give you an estimate of how much you can borrow. To get increased certainty around how much you can afford, we recommend getting a verified approval.

<br>
<div style= "background-color:#F0F7F1;padding: 24px 42px; color:#292B29; border-radius: 12px"  >
<h3 style="font-weight:bold;">Three Minute Pre-Approval
</h3>
<p>
At Better Mortgage, our <a style="color:#292B29; " href="https://better.com/start">pre-approval process </a> is 100% digital and takes as little as three minutes. At the end of pre-approval, you’ll see your maximum estimated loan amount. Plus, you can edit your letter 24/7 in your dashboard to reflect any loan amount within your maximum that you need.
</p>
</div>
<br>

## What is a mortgage verified approval? <br> 

A verified approval also shows how much a lender is willing to lend you for specific loan terms, but unlike a pre-approval, it’s [fully underwritten](https://better.com/content/underwriting-process) by an underwriter. 
<br>

### When should I get a verified approval? <br> 
 
Verified approvals are not required in the mortgage process, but can be extremely impactful before you start making offers in order to stand out against competing bids. 

Verified approvals can increase your likelihood of winning an offer because sellers want confidence that the offer they accept won’t fall through. A verified approval gives a seller certainty that their buyer will get the loan as long as the buyer’s finances don’t change during the mortgage process, and that everything with the house, like appraisal and title, is completed successfully.

 ### How to get a verified approval? <br> 

In order to issue a verified approval, lenders will need to verify your income, assets, and credit. This will involve a hard credit check, employment verification, and a review of certain documents. The exact set of documents will vary based on each person’s financial situation, but typically include: 

<li> W-2s
<li>  Tax returns 
<li>  Pay stubs 
<li>  Bank statements</li>

<br>

#### Is my verified approval final? <br> 

While a verified approval is an official document telling you how much a lender will let you borrow, your loan is not guaranteed. You can lose your approval if your financial situation changes. For example, your qualification could be impacted if you lose your employment or take out a new loan during the mortgage process that impacts your credit and/or debt-to-income ratio.

Additionally, any approval is conditional upon the home you buy also meeting certain requirements, like appraising at the amount you have placed an offer for, and clearing title to confirm that no one else has an ownership claim to the property. At the time you get a verified approval, you may or may not have a specific home address, and appraisal and title don’t start until after you have an accepted offer, so it is not final.

#### What is a debt-to-income ratio?

Your [debt-to-income ratio](https://better.com/content/what-is-a-good-debt-to-income-ratio) (DTI) is your monthly debt payments divided by your gross monthly income. The highest DTI you can have and still get approved for a conforming loan at Better Mortgage is 50%. Let’s say your monthly debt payments are $3,800 and gross monthly income is $8,000, so your DTI is 47.5%. If you take out an auto loan at $300/month, your debt to income ratio would increase to 51.25% ($4,100 / $8,000 = .5125) and potentially make you ineligible for the mortgage. 

<div style= "background-color:#F0F7F1;padding: 24px 42px; color:#292B29; border-radius: 12px"  >
<h3 style="font-weight:bold;">One Day Verified Approval
</h3>
<p>
While this process can take weeks with traditional lenders, at Better Mortgage we offer verified approvals in 24 hours or less for qualifying borrowers.¹
</p>
</div>
<br>

## What is mortgage conditional approval? <br>

Conditional approval is a binding agreement from your lender approving you for specific mortgage terms on the home you are buying. Like a verified approval, it means your finances have been fully underwritten. The key differences are that it is always for a specific home and is issued after you’ve made an offer. 

At this point, the steps left until you close are related to verifying that there are no issues with the items like home inspection, appraisal, or title. 

### When will I get conditional approval? <br> 

Conditional approval happens after you have a signed purchase contract if you’re buying, have locked a rate, and your finances have been underwritten by an underwriter. 

### How to get a conditional approval? <br> 

Conditional approval is a standard step in the mortgage underwriting process. In order to get a conditional approval, you will apply for a mortgage, lock a rate, and start underwriting. 

### Is my conditional approval final? <br>

Same as with a verified approval, a conditional approval is not a guarantee you will get the loan and is still contingent upon a successful appraisal and title search. During this period, it’s crucial that you maintain your finances and avoid taking out any lines of credit or loans. 

<br>
<div style= "background-color:#F0F7F1;padding: 24px 42px; color:#292B29; border-radius: 12px"  >
<h3 style="font-weight:bold;">One Day Conditional Approval
</h3>
<p>
Conditional approval can take weeks with traditional lenders. At Better Mortgage, we deliver you a conditional approval via a commitment letter in as little as 24 hours with <a style="color:#292B29; white-space:nowrap;" href="https://better.com/b/one-day-mortgage"> One Day Mortgage</a>.²
</p>
</div>
<br>


## Pre-approval vs verified approval vs conditional approval <br>
![Mortgage pre-approval vs verified approval vs conditional approval table comparison](https://cdn.builder.io/api/v1/image/assets%2Fea37b90b89334a2ab1714e2159c75418%2F1e9290023cfa4b2ca59f33fc20842057) 

## Start the mortgage approval process today <br>

At Better Mortgage, we’ve built technology that no other lender has, to deliver our customers mortgage approvals faster than anyone else we’ve seen. 

<li>  3 minute pre-approval: Get your pre-approval letter and custom rates online without any impact to your credit </li>
<li> One Day Verified Approval: Make competitive offers by getting an underwritten approval in 24 hours¹ </li>
<li> One Day Mortgage: Go from accepted offer to binding conditional approval via a mortgage commitment letter in one day²</li>


 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/start">Get pre-approved today</a>  
 </div>

<p class="legal" style="margin-top: 40px">  Disclaimer: This post does not constitute an endorsement or recommendation of Better Mortgage Corporation; Better Real Estate, LLC; Better Cover, LLC; Better Settlement Services, LLC; or their services. Better Cover is solely responsible for homeowners insurance services. Better Mortgage is solely responsible for making all credit and lending decisions with respect to mortgage loans. 
<br>
 ¹ <a class="textlink" href="https://better.com/b/One-Day-Verified-Better-Approval-Letter-Terms-and-Conditions"> See One Day Verified Approval terms and conditions </a> 
<br>
²Better Mortgage’s One Day Mortgage promotion offers qualified customers who provide certain required financial information/documentation to Better Mortgage within 4 hours of locking a rate on a mortgage loan the opportunity to receive an underwriting determination from Better Mortgage within 24 hours of their rate lock. The underwriting determination is subject to customary terms, including fraud and anti-money laundering checks, that take place pre-closing and which may trigger additional required documentation from the customer. Better Mortgage does not guarantee that initial underwriting approval will result in a final underwriting approval. <a class="textlink" href="https://better.com/with/one-day-mortgage-terms"> See One Day Mortgage Terms and Conditions. </a>

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Explore pre approval, verified approval, and conditional approval stages, what lenders verify at each, and how faster approvals strengthen home bids today.

Mortgage approvals: from pre-approval to conditional

Blog post image for Mortgage approvals: from pre-approval to conditional

![Purple Image with an Ellipse with the Front of a Condo Within and a Half Golden Circle to the Right](https://cdn.builder.io/api/v1/image/assets%2Fea37b90b89334a2ab1714e2159c75418%2F4e50b45919444ef781f46d18a8f88d08)

# Discover how FHA condo approvals work, including loans and eligibility criteria. 

Dive into our blog for all the details.

## What is FHA condo approval and why is it necessary?

FHA condo approval is a certification process that allows condominium projects to become eligible for FHA-insured loans. It ensures that the condo project meets certain standards and requirements, providing assurance to lenders and buyers that the property is financially stable and a good investment.

 <br>
  <div class="learn">
<p class="learnfont"><strong>What You’ll Learn</strong></p>

<p class="learnfont">The kinds of condos you can buy with an FHA loan</p>

<p class="learnfont">How to qualify for an FHA loan</p>

  <p class="learnfont">What to do if the condo you want isn’t FHA approved</p>

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If mowing the lawn, cleaning the gutters, or washing windows isn’t your idea of a fun weekend activity, a condo may be the right home for you. Condos typically cost less than single-family homes, you’re only responsible for maintaining the interior, and they’re often located close to amenities. In fact, larger condominium neighborhoods may even have shared amenities such as swimming pools, pet parks, and even golf courses. If you’re a homebuyer with a smaller down payment, lower credit score, or higher DTI, an FHA loan could be the way to make homeownership happen. Additionally, condo owners pay condominium association dues for the upkeep of shared common areas, such as garages, pools, outside hallways, gyms, and clubhouses.
Before you make the big decision to let a specific condo steal your heart, it’s important to know about the FHA condo approval process. Not all condos are available to homebuyers with an FHA loan because FHA loans are insured by the Federal Housing Administration (FHA) and there are strict payment requirements for the kinds of condos the FHA will approve. If a condo doesn’t make the FHA’s list, you won’t be able to buy it with an FHA loan. So let’s dig into which condos are FHA approved, how to get an FHA loan, and what to do if the condo you want isn’t on the FHA’s list.

## What is an FHA approved condo?

For a condo to be approved for an FHA loan it must be on the FHA’s list of approved condominium projects. To make the FHA’s approved condo list a condo must meet 3 basic requirements:

- It must be **primarily residential**.
- It must contain at least **two dwelling units**.
- It must be either **detached, semi-detached, a row house, a walk-up, mid-rise, high-rise**, including those with or without an elevator, or manufactured housing.

[In 2019, there were 150,000 condominium projects across the country, but only 6.5% of them qualified for FHA financing](https://www.spglobal.com/marketintelligence/en/news-insights/trending/_rm_ulplkwzhn1akd2gm8a2). Since then, new rules have been introduced to enable individual condo units to be eligible for FHA loans even if the full condo development isn’t approved. This is to increase the number of FHA approved units by up to 70,000 new units per year. Under the new rules, the FHA loan approval process evaluates the entire condominium project, not just the individual unit. Single condos within projects that are not approved can now be approved through a single-unit approval process sometimes called “spot approval.” The FHA loosened its eligibility requirements for condo owners in 2019, allowing individual condo units, including manufactured homes, to be eligible for FHA loans even if the full development isn't approved. This change, known as "spot approval," has opened up more opportunities for condo buyers to secure FHA financing.

Despite the new guidelines, “Condo hotels,” timeshares, houseboat projects, or condos that feature more than one dwelling in a single condominium unit are ineligible for homebuyers who need FHA financing.

## How to find out if a condo is FHA approved

The U.S. Department of Housing and Urban Development (HUD) maintains [this list](https://entp.hud.gov/idapp/html/condlook.cfm) of condominiums that are approved for an FHA condo loan.

To search for FHA approved condos you’ll need the state, county, and maybe the zip code (if you’d like to narrow your search to a more specific area). The list includes condominium projects that are approved, expired, rejected, or withdrawn, so select ‘approved’ status to make sure the condo you’re interested in can be financed with an FHA loan.

If a condo has already caught your eye, all you need is the condo name and state to see if it’s on the list. Alternatively, you could work with an experienced [real estate agent](https://better.com/realestate) who’s familiar with both FHA approved condos and the neighborhood where you’re hoping to buy.

## How a property gets approved for an FHA condo loan

As a homebuyer, this is more of a nice-to-know because no matter how much you want to buy a condo that’s not on the FHA approved condo list, it’s not your responsibility to get the condo FHA approved. The condo developer or their agent is typically responsible for getting their condominium project FHA approved. If the condo has been around for a while, the condo association or their management company submits the condo approval package. Additionally, it is important to note that the condo’s homeowners association (HOA) must have at least 10% of its HOA budget in a cash reserve to meet FHA requirements for commercial use.

If you want to learn about what goes into a condo approval package, or would simply enjoy some “light bedtime reading,” this 95-page [Condominium Project Approval and Processing Guide](https://www.hud.gov/sites/documents/11-22MLGUIDE.PDF) covers all the documentation and requirements the FHA needs to approve a condominium project.

Here are the highlights:

- The condominium project must have adequate insurance coverage
- Commercial space must not be more than 25%, up to a maximum of 55%, 35% of the project’s total floor space, depending on the project. 
- No more than 10% of the total units can be owned by one investor
- The project’s area structures, as well as the housing units themselves, must be complete
- Bylaws and covenants of the condominium must not violate the [Fair Housing Act](https://www.hud.gov/program_offices/fair_housing_equal_opp/fair_housing_act_overview)
- Condos, aka ‘condotels’, that double as a resort-type property are prohibited
- The project must be located a reasonable distance away from transportation infrastructure
- At least 50% of the units must be owner-occupied
- No more than 15% of units in the property can be behind on their homeowners association dues
- The project must have adequate capital reserves

As you can imagine, it can be time-consuming and often costly to get a condo project FHA approved and that’s why most condominium projects forgo FHA approval. Instead, they’re built in the hope that buyers use a [conventional loan](https://better.com/content/conventional-loan-requirements/) to finance their condo purchase.

## FHA condo requirements

There isn’t a specific FHA mortgage condo loan per se. You’ll need to be approved for an FHA mortgage loan and find a condo to buy on the FHA approved condo list. FHA mortgage loans have specific requirements for the types of residences you can buy, so you’ll be pleased to know that if you want an FHA-approved condo to be your primary residence, the property will automatically meet FHA mortgage loan requirements. However, it's important to note that investment properties and vacation homes are not eligible for FHA loans.

To be eligible for an FHA home loan you’ll typically need (keep in mind some requirements may vary by lender):

__A.__ A credit score within the eligibility range based on your down payment amount or even your lender’s specific requirements:

  1. If your down payment is 3.5%–9.9%, you’ll need a credit score above 580

  2. If your down payment is 10%, a credit score between 500–579 will suffice

  3. If applying through Better Mortgage, credit score of at least 580 is required to qualify

__B.__ A [debt-to-income (DTI)](https://better.com/content/3-most-important-numbers-mortgage-application/) ratio of 43% or less

__C.__ Evidence of steady income and proof of employment

__D.__ To make [mortgage insurance premium](https://better.com/faq/home-purchase-loan-costs/what-is-mortgage-insurance-premium-mip) (MIP) payments, in most cases for the life of the loan in most, plus a one-time upfront MIP payment equal to 1.75% of the loan amount


MIP is similar to [private mortgage insurance (PMI)](https://better.com/content/what-is-pmi-or-private-mortgage-insurance/), which borrowers with [conventional mortgages](https://better.com/content/conventional-loan-requirements/) need to pay if their down payment was less than 20%. Conventional mortgage borrowers will automatically stop paying PMI once they’ve reached 22% equity in their home (when they have 20% equity in their home, they can request an end to PMI). MIP, on the other hand, must be paid for the life of most loans. If your down payment is more than 10%, however, you can ask for MIP to end after 11 years of payments.

FHA [home loan requirements](https://better.com/content/conventional-loan-requirements) also allow borrowers to make down payments using gifted money from family or a friend. In this case, a [gift letter](https://better.com/content/how-to-use-a-gift-letter-for-your-mortgage/) will need to accompany the mortgage application to prove that the gift does not need to be paid back.

A range of [mortgage lenders](https://better.com/mortgage) offer FHA home loans and their eligibility requirements may differ. At Better Mortgage, for example, you’ll need a DTI ratio of 50% and a minimum credit score of 580 regardless of your down payment amount.*

## If the condo you want isn't FHA approved, you have options

While there’s no harm in asking if the condo developer or condo association can submit their condo for FHA approval, given that it can take from two weeks to over three months to get an FHA condo approval, it’s unlikely you’ll get a satisfactory result that works with your homebuying timeline.

If you know you’ll need to get an FHA home loan to buy a home, you’ll need to keep looking until you find a condo on the FHA approved condos list or consider buying a single-family home instead.
If an FHA loan does not sound right for you, you’re in luck! You may be eligible for a conventional loan with Better Mortgage. In fact, qualifying first-time homebuyers can get a conventional mortgage with a down payment as low as 3%. As an added bonus, you’ll no longer be limited to buying a condo that’s approved by the FHA. Additionally, if you’re eligible for the Fannie Mae HomeReady program, you may be able to snag a condo with a 3% down payment. However, to qualify for this program, you'll need at least a 620 credit score and income limits will apply.

In as little as 3 minutes, Better Mortgage can show you which types of loans you may qualify for, the homebuying budget you’ll have to work with, and they will match you with a loan consultant to walk you through your options to help you make the best financial decision for you and your family.

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 <p class="legal">*Eligibility is subject to change.</p>

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Learn about FHA condo approval requirements for buyers, including eligibility rules, documentation needed, and how to find FHA-approved condominium projects.

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