I've been renting an apartment for four years and I'm ready to buy a condominium instead. I've been saving money for a down payment and my credit's OK, but I've heard it can be even harder to get a mortgage for a condo than a house. Is an FHA loan a better option for a condo?

Condo mortgages are a little different than a regular mortgage, mostly because the lender needs to review not only your financial qualifications but also the condo association's fiscal health. Both conventional and FHA lenders will check to see that the condo has adequate financial reserves and insurance, but FHA loans have another requirement: The condo must be on a list of approved condo associations. If the condo you want to buy isn't on the FHA list, your lender or the condo association can request to have it approved, but that can take months.

In order to earn an FHA approval, a condo project must have less than 50 percent of the units financed with FHA-backed financing; no more than 15 percent of the owners can be 60 days late or more on their condo dues; and at least half of the units must be owner-occupied.

When you search for condo financing, ask a lender to find out if the condo is FHA-approved. If not, you should find out why. If the condo association is having financial trouble, you're better off not buying there at all.

Even if the condo allows FHA financing, be sure to compare both a conventional loan and an FHA loan to see which one has lower payments. Unless you have a down payment of 20 percent or more, both loans will require mortgage insurance.

Conventional loans often have a slightly higher interest rate for condos because they are considered a little riskier as an investment than single family homes. In addition, you'll need a credit score of 740 or higher to get the lowest mortgage rates on a conventional loan.

FHA loans require a down payment of as little as 3.5 percent, all of which can be a gift from a relative. You can often qualify for an FHA loan with a credit score as low as 620 or 640, depending on the lender.

Whether you choose an FHA loan or a conventional loan, make sure you factor your condo fee into your housing budget. Fees vary widely, so when you are condo shopping, check out the fees and what they cover before you make your choice.

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