Buying a condo involves unique mortgage considerations that don't apply to freehold houses. Understanding these differences helps you navigate the process smoothly and avoid surprises.
Key Differences: Condo vs. House Mortgages
| Factor | Condo | House | -------- | ------- | ------- | Condo fees | Included in qualification | N/A | Status certificate | Required for approval | N/A | Building approval | Lender may restrict | Generally not an issue | Insurance | Building + personal | Homeowner's only | Appraisal focus | Unit AND building health | Property only |
How Condo Fees Affect QualificationCondo fees (maintenance fees) are included in your Gross Debt Service (GDS) ratio: GDS Calculation with Condo: Impact on Borrowing Power: |
Monthly Condo Fee | Reduction in Mortgage Qualification | ------------------- | ------------------------------------ | $300 | ~$60,000 less | $500 | ~$100,000 less | $700 | ~$140,000 less | $1,000 | ~$200,000 less | The trade-off: Higher condo fees reduce borrowing power but often include utilities, maintenance, and amenities you'd pay for separately in a house.
Status Certificate: Your Due Diligence DocumentThe status certificate reveals the condo corporation's financial and legal health: What It Contains |
Section | What to Look For | --------- | ------------------ | Reserve fund | Adequately funded? (Industry benchmark: $2,500+/unit) | Special assessments | Any upcoming or recent? | Legal issues | Ongoing litigation? | Budget | Balanced? Surplus or deficit? | Rules/bylaws | Any restrictions on rental, pets, etc? | Meeting minutes | Major issues discussed? |
Red Flags
Finance Your Condo PurchaseGet pre-approved today with a team that understands condo-specific financing requirements. Building Restrictions: Know Before You ShopSome buildings have lender restrictions: Common Restrictions |
Issue | Lender Response | ------- | ---------------- | Building over 4 storeys wood frame | Some lenders won't lend | High rental percentage (35%+) | Higher down payment required | Commercial percentage high | Limited lender options | Previous flood/fire damage | Case-by-case | Pending major repairs | May delay approval | Building under 1 year old | Some restrictions |
CMHC RestrictionsFor insured mortgages (under 20% down):
Condo Fee ConsiderationsWhat's Typically Included
What's Usually Extra
The "Right" Condo Fee |
Fee Level | What It Might Mean |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Very low (<$300) | Underfunded reserve, minimal amenities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Moderate ($400-$600) | Typical well-managed building | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Higher ($700+) | More amenities, older building, or utilities included |
Warning: Very low condo fees often mean special assessments are coming. Check the reserve fund carefully.
Finance Your Condo Purchase
Get pre-approved with a team that understands condo financing.
Get StartedCondo Insurance Requirements
Building Insurance (Corporation)
Covers the structure itself. Not your responsibility.
Unit Insurance (Your Responsibility)
Lender requires:
- Contents insurance
- Personal liability
- Unit improvements/betterments
- Gap coverage (if applicable)
Typical cost: $25-$75/month
FAQ
Q: Can I get CMHC insurance on a condo?
A: Yes, same rules as houses—5% minimum down on homes under $500K. However, the building must meet CMHC criteria.
Q: What if the building has a special assessment?
A: Depends on the amount and purpose. Small assessments rarely affect approval. Large assessments may require the seller to pay before closing or affect your financing.
Q: How do condo fees affect my payment?
A: They don't directly increase your mortgage payment, but lenders consider them when qualifying you. Your total monthly housing cost includes both mortgage AND condo fees.
Q: Can I rent out my condo unit?
A: Check the building's rules. Some condos restrict rentals. High rental percentages can also affect future buyers' financing options.
Q: What if I want to buy in a new building?
A: Pre-construction has different considerations—see our new construction mortgage guide.
What's Next
Condo purchases require specialized knowledge. Get pre-approved with our team who understands condo-specific requirements and can guide you through status certificate review and building approval.
Finance Your Condo Purchase
Our team understands condo-specific requirements and can guide you through the process.
