Yes it is possible to use a VA loan to purchase a condo in New York. BUT…the condo must be a VA approved condominium. If the condo is not on the list, you cannot use a VA loan to purchase the condo.
Everyone wants an affordable home…but there are other considerations you must take into account when considering a Condo.
As an advocate for First Time Buyers, I always give this advice to clients who are considering purchasing a condo. First, consumers often have the mistaken impression that condos are “cheaper” or have lower monthly payments than you would have for a home purchase, say of a Single Family Home.
While this may be true on the overall price of the property, in terms of the monthly payment, a condo can often be nearly equal to that for a single family home. This is because the monthly expense for a condo is not only Principal, Interest, Insurance and property taxes (and mortgage insurance depending on the loan program if other than VA), but also the monthly expense for the Homeowners Association. This “HOA” cost can be prohibitively expensive. When I prequalify a client for a condo in NY Metro area, I use an average monthly HOA expense of $650. Obviously HOA fees vary from one condo to another, but this is a fair average cost based on my experience.
So,when factoring that $650 into a monthly housing expense, the overall monthly expense for a condo can be almost or exactly equal to that of a single family home.
Therefore, I advise first time buyers to look at the other aspects of condo living to make a determination as to whether this is a good “fit” for their home buying experience. If a condo is considered as a “starter home” experience, then I would caution a first time buyer that a single family home is probably a more reasonable property to accomplish that goal.
Other factors to consider with condos:
–When real estate markets turn “down” Co-Op, Condo, and 3 & 4 Family homes tend to suffer first in the potential for resale. So, if you own one of these properties, and you MUST sell, but the market has turned south, you will face significant challenges in getting your home sold.
-Living in a condo means you will often be living “up close and personal” with your neighbors. Very much similar to living in an apartment building, even if the condos are townhome style properties.
–Condo living comes along with restrictions—more often than not—on what you can and cannot do to your property.
–Overall costs for a condominium can increase dramatically if the condo is poorly-managed, or if an unexpected major incident—such as a heating system failure or roof collapse—occurs and winds up costing the condo monies in excess of their “capital reserve” account. If a condo association needs to increase its capital reserve account for any reason, this means a special assessment for the individual condo owners, maybe as much as several hundred dollars a month.
I often say to first time buyers that Condo living differs from owning a single family home not in the monthly payment, but rather by asking this question: “Do you mind shoveling snow?”
BOTTOM LINE: Approach a CONDO purchase by reviewing ALL variables in the experience and don’t focus solely on cost.
Read about the Basics of VA loans HERE.
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